Local content in South Africa’s renewable energy market can support domestic manufacturing, strengthen industrial capabilities, and create decent jobs. Yet procurement instability, weak verification, and apparent evasion of localisation measures are limiting these benefits, leaving manufacturers without the reliable orders needed to sustain production and employment.
This policy brief by Jezri Krinsky and Sinazo Sijovu examines the design and implementation of local-content requirements. It identifies weaknesses in procurement, monitoring, exemptions, and tariff enforcement, and proposes measures to turn renewable energy investment into sustained demand for South African products.
Connecting procurement to domestic manufacturing
South Africa has an established manufacturing base for renewable energy components. Public procurement programmes involving independent power producers provide an important potential market for these firms.
Local-content requirements specify how much of a project’s value must be sourced domestically. Product designations go further by requiring particular goods to be procured locally. The brief explains why both matter: broad spending thresholds can be met through civil works and basic infrastructure without supporting higher-value manufactured components.
However, local manufacturers need a stable pipeline of orders. Procurement delays and inconsistent demand have contributed to factory closures, layoffs, and lost opportunities for skills development.
Closing gaps in verification and compliance
The brief raises concerns about whether procurement commitments translate into purchases from domestic manufacturers. It identifies limited verification capacity and reports from manufacturers of unreasonably short delivery deadlines, demanding specifications, and quotations that may have been used to justify importing products.
Waivers can provide legitimate exemptions where local suppliers cannot meet requirements. However, the brief argues that opaque processes and insufficient scrutiny can allow exemptions to undermine localisation.
It also examines how tariff evasion can weaken demand for domestic goods. Coordinating tariff enforcement with local-content measures could support local suppliers across publicly procured and private renewable energy projects.
Priorities for stronger localisation
The brief recommends:
- Strengthen verification. Require comprehensive local-content checks for winning bidders, funded by the firms concerned, and strengthen the South African Bureau of Standards’ verification process.
- Apply meaningful remedies. Require developers found to have evaded local-content requirements to deploy locally manufactured equipment at their own expense or face debarment.
- Improve waiver transparency. Publish decisions to set requirements aside, strengthen technical assessment capacity, and investigate potentially misleading price or specification comparisons.
- Support fair supplier relationships. Ensure sufficient production lead times and substantial upfront payments, while enabling smaller manufacturers to pool capacity for larger orders.
- Strengthen procurement requirements. Retain local content and product designations as mandatory prequalification criteria, and extend relevant designations to batteries used in renewable energy systems.
- Coordinate standards and tariff enforcement. Apply common technical standards to domestic and imported products, improve tariff-code verification, and address practices that enable duties to be avoided.
- Link support to decent work. Make continued industry support conditional on meaningful commitments to employment quality.
Together, these reforms would help protect and develop domestic productive capacity. More reliable demand, fairer contracting, and stronger accountability can enable localisation to support lasting industrial development and more secure employment throughout South Africa’s energy transition.
About the project
This publication is an output of Advancing a Just Energy Transition: Localisation, Decent Work, and Sustainable Livelihoods, a multi-country research project examining the energy sectors of Ghana, Kenya, and South Africa in the context of global decarbonisation. The project investigates how localisation, decent work, gender equity, SMME participation, and sustainable livelihoods can be embedded in renewable energy production networks to strengthen local manufacturing and avoid reproducing unequal global economic patterns.