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Johannesburg - There is a better understanding of radical economic transformation among players in the automotive industry, following engagements with the ruling party and government.
This is according to the ANC’s Treasury General Zweli Mkhize, who was speaking at a press briefing on Wednesday alongside the National Association of Automobile Manufacturers of South Africa (Naamsa) at the EY offices in Sandton.
The ruling party has been having discussions with various industries, including financial services, to set the record straight on perceptions around radical economic transformation, explained Mkhize. Trade and Industry Minister Rob Davies and Transport Minister Joe Maswanganyi were also involved in the engagements.
“The automotive sector is important in terms of job creation, and has a cascading impact on downstream industries,” he said. Concerns particularly sprung up when General Motors announced in May that it would be disinvesting from the country.
The discussions with industry players were aimed to develop a way forward to drive transformation, inclusive growth. This includes creating opportunities for participation of black entrepreneurs and industrialists, he said.
“We had seen business become uncomfortable with the terminology of radical economic transformation. We explained it to make sure people come to terms with it,” said Mkhize.
There has been a lot of skepticism regarding radical economic transformation, but it should be viewed as a new way of doing business in South Africa, he said.
Mkhize explained that these discussions will be continued across different industries, but that it may not be enough to settle ratings agencies’ concerns. “We do not think engagements are enough to reassure ratings agencies. It is important to continuously demonstrate the fact that there is continuous engagement, looking for solutions, growth, and stabilising the economy.”
“The leadership in the sector [automotive] have openly embraced radical economic transformation,” he said.
Andrew Kirby, president of Toyota, who was at the briefing confirmed that there was a better understanding of radical economic transformation. “We must transform quicker, we must solve the country’s challenges. We need to continuously have engagements.”
Transformation master plan
As such a master plan for 2035 has been developed to drive transformation. This includes increasing manufacturing volumes from 600 000 units a year to 1.4 million. Local content is to be increased from 38% to 60%. Employment in the industry should be doubled. Black enterprises in the value chain is also to be doubled, explained Kirby.
This would require optimising the local market to support economic growth in the country, develop the regional market, increase localisation, support infrastructure development, technology and skills development and transform the industry through a wide range of initiatives.
BMW’s Tim Abbott explained that a fund will be developed to support transformation initiatives. “The money will be allocated to downstream and upstream organisations,” he said.
This includes developing black ownership in terms of supply chain and the dealer network. This also includes management support.
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