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NAAMSA announces a R 6billion automotive industry transformation initiative

NAAMSA announces a R 6billion automotive industry transformation initiative
  • Automotive Industry Transformation Fund will support the development of black-owned companies in the automotive supply valuechain;
  • All seven South African based OEMs willcontribute;
  • The 10-year Fund serves a major catalyst towards the implementation of the South African AutomotiveMasterplan.

The National Association of Automobile Manufacturers of South Africa [NAAMSA] on Wednesday confirmed the launch of a R6billion Automotive Industry Transformation Fund [AITF] designed to support black participation in the automotive industry supply chain.

Officially announced by President Cyril Ramaphosa on Wednesday morning at the South African Investment Conference, the fund will become an indispensable transformative tool that will contribute directly to the sustainable development of the country’s productive economy. The launch of the Automotive Industry Transformation Fund marks the beginning of a major sector-wide initiative to meaningfully transform the automotive industry by broadening and deepening the participation of black and historically disadvantaged entrepreneurs to participate in the sustainable growth and development of the industry.

In support of the SA Automotive Masterplan objectives, the fund’s mission will be to accelerate the empowerment of black South Africans within the auto sector; upskilling of black employees and wannabe auto entrepreneurs; expansion of black-owned dealerships and authorised repair facilities and workshops; substantially increase the contribution of black-owned automotive component manufacturers within the automotive supply chain; and above all, create meaningful and sustainable employment opportunities for young and female black South Africans.

GOOD CORPORATE CITIZENS TO GROW BLACK PARTICIPATION IN THE AUTOMOTIVE SUPPLY CHAIN

The South African automotive manufacturing industry is multi-national dominated. Participating Original Equipment Manufacturers [OEMs] namely BMW, Ford, Isuzu, Nissan, Toyota, Mercedes-Benz, and Volkswagen will for the first time, be able to meaningfully participate and comply with all five elements of the Broad-Based Black Economic Empowerment [BBBEE] Generic Scorecard, including the Ownership Element. Until now, the Ownership Element has been intangible for industry OEMs since the first enactment of the BBBEE Codes of Good Practice in July 2007. After extensive consultations and discussions with the Department of Trade, Industry and Competition, provision for the recognition of contributions in lieu of a direct sale of equity through Equity Equivalent [EE] contributions has been agreed to, hence the launch of the Automotive Industry Transformation Fund.

Designed to seed, develop and grow black-owned companies within the automotive supply chains, the unique feature of the Auto Transformation Fund is that it is powered, supported and funded by the seven OEMs that will directly use the services of black-owned businesses to grow and deepen transformation across the entire auto value chain. Opportunities for private capital and other government initiatives to co-invest will accelerate and create greater momentum in the automotive sector, which already contributes approximately 6.9% to the country’s gross domestic product and accounts for 30.1% of the country’s overall manufacturing output.

The Automotive Industry Transformation Fund will be independently incorporated and registered as a non- profit company and will have its own board of directors and executive management team in line with the Companies Act in order to enhance transparency and good corporate citizenry.

ADDRESSING BARRIERS TO ENTRY

After the President’s announcement, NAAMSA CEO, Michael Mabasa said that the launch of the Transformation Fund was a game-changing occasion that would modernize the automotive industry’s social contract with South Africa. “Big business’ desire to empower and invest in black people should be natural. This Auto Fund is not a nice to have, but a business imperative that makes business sense to the success and sustainability of the industry. We need to systemically and unashamedly address barriers to entry which remains very high in the motor industry for many new and aspiring entrants”, said Mabasa.

“Our transformation ambition is to grow the South African automotive industry through the acceleration of employment of black South Africans, upskilling our black employees who are already in the system and those who wish to work in the industry. This Fund should attract and make it fashionable for young people and for females to want to manufacture cars of the future either directly within our vehicle assembly plants or to drive black industrialist participation in portions of value chain open to national capital - Tier 2-3 of manufacturing value chain, dealerships and authorised repair facilities”, said Mabasa.

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