“The significance of this accord is that decisions will now be taken on buying local goods and this in the end will go a long way in raising our competitiveness and development of local producers,” Economic Development Minister Ebrahim Patel told reporters at the conclusion of the discussions on Monday.

“This Accord is one of a series of agreements in which social partners commit to work together to achieve the goals of the new Growth Path,” Patel said. Government wants to the new Growth to help create five million new jobs by 2020.

Under his leadership and that of Trade and Industry Minister Rob Davies, government committed to “significantly” expand the value of goods and services it procures from local producers using new regulations that are set to come into effect in December.

Davies emphasised that only locally produced goods will be targeted, adding that company ownership will not necessarily qualify individuals for procurement. “The fact that ownership of the company is held by South Africans will not count; we are targeting proudly South African products meaning products must have been produced in South Africa.”

Several products and services will be identified to allow only local manufacturers to produce these. They include railway equipment, clothing and textile and food products. While it is still not clear how this will impact on foreign investors, Patel said the initiative had a potential of directing billions of Rands to local producers, something which he said will in turn boost the local economy. Government departments will adopt an SABS standard to identify and define local content in various categories.

Business said it will drive the effort in the private sector to improve local buying by the country’s 84 largest companies.

“As business we see this as yet another tool to contribute towards economic transformation… we are now beyond talking action,” said Business Unity SA CEO Nomaxabiso Njokweni. The deal would not only help improve local competitiveness but will go a long way in developing new enterprises and boosting existing ones, she said.

COSATU’s Zwelinzima Vavi described the move as a “milestone in reversing the wrong things that we have seen happening”.