The Seven Sins of Localisation: Can South Africa afford this costly policy?
- In June 2023, CDE held a roundtable discussion with key stakeholders on how localisation is progressing, what its proponents see as important arguments in its favour, and whether this set of policies is reaping any success.
- There is some debate about what ‘localisation’ means. CDE believes that localisation in South Africa is best understood not simply as ‘developing local industry’, but as a preference for the sourcing of domestic goods and services at the expense of foreign firms.
- If legislation is required to compel purchases of local goods, it must be the case that imports would have been preferred, presumably because of their price or superior quality. Localisation is effectively a tax on consumption and investment, with consumers, firms and taxpayers having to foot the bill.
- A debate about localisation is a debate about the future of our economy. As UCT Professor of Economics David Kaplan put it, “The question is: do we want our future to be inward-looking or do we want to be integrated with the global economy, learning from others and increasing our export footprint, growing our economy and providing the jobs and inclusion we so desperately require?”