The government’s plan to boost localisation while blocking some imported products is facing some scepticism, despite the strategy’s support from the likes of Clicks, Anglo American and Sasol.Whilst trade and industry minister Ebrahim Patel maintains his department’s localisation strategy is gaining traction, many importers are expected to be hit hard by the plan that would see the localisation of up to R200 billion of additional production over five years.Trade and industry has identified 42 products so far and raised R240 million from the private sector to appoint technical experts to drive localisation.But many importers are questioning how the government arrived at its list of 42 products, saying there were no gazette notices or industry-wide consultation with companies.Francois Fouche from Growth Diagnostics, in collaboration with the North-West University Business School, said part of the problem lay in this consultation process because while there was consultation with some companies, there were many that had not been consulted“The localisation drive is about import substitution. It sounds like a really good idea until you put it to the test,” he said. “The current policy direction is to see thousands of products localised within five years. It is questionable whether this is realistic or even desirable.”Fouche said the challenge with the policy was that South Africa was not making anything new, but rather just creating an array of tariffs and duties to make imports more expensive. “Essentially this strategy is protecting local firms that are already uncompetitive, meaning there is even less incentive for them to be innovative. Steel is a good example of this.”Fouche said it was easy to understand why many importers were wary of the localisation strategy as it had the potential to damage the economy if not implemented with caution.“I think one has to be very clear, business in South Africa supports localisation, but it does not necessarily believe the government knows how to do it.”This sentiment was shared by several other business executives, judging by an Intellidex survey of 150 companies earlier this year. It found that businesses were willing to choose local products, as long as they were available, the right quality and the right price – and the businesses had the capacity to supply reliably.“This report showed that business is in favour of localisation, but only under the right conditions. New calls for localisation based on protecting what we have whilst not making new things, or making existing industries more competitive for the export market, is not necessarily the right approach.”Fouche said forcing localisation by disallowing the import of some products based on a list of products that have to be sourced locally with the wrong constraints in place ran the risk of upsetting the balance between price, quality and capacity.“The current policy is creating a siege economy. The exact opposite is required,” he told Freight News. “Localisation is not possible with a top-down approach. For the government to mastermind what products we should get from where and who should produce them is a risky approach. Even with perfect information, it is simply not possible to map the whole economy like that.”South Africa is not making anything new, but rather just creating an array of tariffs and duties to make imports more expensive.– Francois Fouche