The Department of Trade and Industry (dti) and the motor industry are now close to finalising the South African Automotive Masterplan which will come into effect in January 2021 and run until 2035. This was the message given by Lionel October, the director-general of the dti, addressing delegates at the NAAMSA Automotive Conference, which was held at the Kyalami Grand Prix Circuit and Conference Centre.
Lionel October was standing in for Dr Rob Davies, the Minister of Trade and Industry, who was unable to attend this important event. October, who has been DG at the dti since 2011, said that the dti and the industry were “99% there” in getting agreement on the Automotive Masterplan which is due to replace the Automotive Production and Development Programme.
He stressed the importance of the automotive industry as a player in the South African economy, where it formed half of annual manufacturing input. He said that increasing industrialisation through more local content and higher production volumes were important components of the Masterplan.
“Higher production volumes result in economies of scale and improve an industry’s competitiveness, which impacts on its ability to localise components, with 60% local content being a Masterplan target,” explained October.
“It is therefore very important that we hit the point where we are producing more than a million vehicles a year in South Africa, rather than the current level of about 600 000.”
He said another key component of the Masterplan was to speed up transformation of the industry with special focus on creating viable black-owned companies in the supply chain as well as the promotion of skilled black employees in the ranks of senior management at major manufacturers, with a score of 4 on the manufacturers’ scoreboard for Broad-based Black Economic Empowerment (BB-BEE) being the target.
Local empowerment in companies operating in South Africa is a major pillar of BBBEE. So, last year the “Big 7” in the South African vehicle manufacturing industry proposed creating a transformation empowerment capital fund of R3.5-billion over a 10-year period as the equity equivalent of having empowerment shareholders in the wholly-owned subsidiaries of multinational companies. The fund will be used to facilitate the entry of black companies and industrialists into all aspects of the local automotive value chain including component suppliers and dealerships.
If this proposal is given the green light by government then the industry should be able to achieve a level 4 on the BB-BEE scorecard.
The dti director-general concluded his address by stressing the importance of the automotive sector taking all possible advantage of continental trade agreements to increase exports into Africa.