The offset programme of the multi-billion rand arms procurement package has markedly improved the economic landscape of South Africa over the past six years, according to Trade and Industry Minister Alec Erwin.

Writing in the 2002 review of the National Industrial Participation Programme (NIPP), Erwin said the NIPP obligations on the foreign arms suppliers helped fundamentally and strategically reshape the economy.

The programme emphasised industrial expansion "on the basis of mutual benefit, driven by sound business principles so vital to ensure that projects are sustainable over the longer term".

"Investments generated through industrial participation requirements of the NIPP in return for large state procurements offshore have enabled foreign investors to add value to their local supply chains and guarantee the quality and consistency of local supply, while still making a profit.

For the state the benefits are considerable," he said.

The NIPP came into effect in South Africa on September 1,1996.

The government's Industrial Participation Secretariat was at present monitoring obligations with participation credits worth about R140 billion covering more than 60 projects, according to the 2002 review.

The programme is obligatory and can be discharged in various ways, including investment, export promotion, research or collaborative business activity.

Not all the industrial offset projects have been a booming success though.

The Ecoplug tree stump-killing device, which is manufactured in Cape Town, has failed to take root because of its reported high price.

Ecoplug SA's former marketing manager Dereck Suckling said one of its main customers - the government's Working for Water campaign - was not buying enough of the plugs because it was priced too high for the local market.

Suckling said the plugs cost about R175 for 100, while the cost of manufacturing them was only about 40 or 50 cents.

The Ecoplug consists of a capsule filled with a herbicide that when inserted into the stumps killed the root system.

His views were echoed by Andrew Brown, the Cape Peninsula National Parks co-ordinator for alien plant clearing.

"We have used some Ecoplugs with mixed results.

"They are effective at killing plants, but the problem is that it is time-consuming to insert them and the costs are prohibitive," he said.

Brown said there were no future plans to roll out the use of Ecoplugs to other national parks in the country.

Speaking from Eskilstuna, Sweden, Ecoplug founder and president Hans Merving said the company employed about 15 staff.

Merving confirmed that the company had recently reduced the price form R2,75 to R1 a plug on big volumes.

He did not want to divulge the costs of production and overseas revenue, only saying that he foresaw the "market increasing in the future to between 100 and 200 million plugs".

Lionel October, the deputy director general for enterprise industry development, said projects were screened beforehand for commercial viability.

"They must produce business plans which are tested by sector experts for their viability.

"We don't want to create white elephants."

He said the department of trade and industry had an ongoing monitoring process, checking on projects every six months.

The department will brief parliament's portfolio committee on trade and industry about the latest developments concerning NIPP tomorrow.

With acknowledgements to Sapa and the Cape Times.