Government takes the automotive sector very seriously, Premier Panyaza Lesufi said at a workshop on township mechanics held in Johannesburg on Wednesday, 6 September 2023.
Addressing a packed hall of industry role players including the Tshwane Automotive Special Economic Zone (TASEZ), the Retail Motor Industry Organisation (RMI), the MerSETA (Manufacturing, Engineering and Related Services), the Automotive Industry Development Centre (AIDC), professional automotive mechanics, apprentices and learners, Lesufi said that key to investing in and growing the sector – particularly in the province’s townships – it was important to make sure that the businesses needed to be regularised and be competitive.
In addition, “those who want to invest in the townships must invest on our terms. They must consult with the local players and make sure they empower them”, Lesufi said.
The workshop was part of the Growing Gauteng Together initiative run by the Gauteng provincial government and the Gauteng department of economic development.
He told the delegates at the workshop that the township economy was critical to developing the country’s economy in general. “This is the only province that has passed a law ensuring that the government will buy services from townships, hostels and informal settlements.”
TASEZ is a prime example of ensuring that townships are included in the development of the automotive sector. One of the policies essential to the TASEZ business model is that investors must make provision for the inclusion of local community members in their workforces.
Lesufi’s message drew on the data shared by the Deputy Minister of Trade, Industry and Competition, Fikile Majola, who noted that the workshop should provide long-lasting, actionable solutions.
SMMEs crucial to economic growth
The triple challenges of unemployment, poverty, and inequality impact on the country’s development agenda, and the townships are the epicentre of these challenges.
More than a quarter of South Africa’s population live in townships and more than half of those in the townships are unemployed, yet the township economy is critical to the country.
He referred to the importance of special economic zones (SEZs) being connected to the township model of economic development. SEZs are geographically designated areas set aside for specifically targeted economic activities to promote national economic growth and exports by using support measures to attract foreign and domestic investments and technology.
TASEZ, Africa’s first automotive city, is located in Silverton near the townships of Eersterust, Mamelodi and Nellmapius. Much of the workforce used in the factories based at TASEZ come from the surrounding communities.
Majola noted that the South African Automotive Masterplan spoke about doubling production by 2035.
“One million cars are manufactured annually on the African continent, with 700 000 of those coming from South Africa, Morocco and Egypt.” The continent had a population of 1.3 billion. He compared this to the production figures from India, which manufactures 4 000 000 cars a year. It has a population of 1.4 billion.
“We must be more competitive and ramp up production.” And that can be done through developing small, medium and micro enterprises (SMMEs). “Globally, all economies are driven by SMMEs, but the number of SMMEs in this country is too small for an economy the size of South Africa,” Majola added.
“If we are to expand the SMME base in South Africa, we have to think outside the box, but within the law.”
TASEZ has a team dedicated to helping develop SMMEs and providing skills development programmes.
Gauteng MEC for Economic Development Tasneem Motara pointed out just how important the automotive sector is to South Africa. It contributed 4.9% to the gross domestic product (GDP) in 2023. “It is a huge player in the economy with the potential to grow.”
However, she added, picking up on the issues of SMMES: “How do we address the challenges small businesses face?” Common challenges include struggling to access to markets; financing; to support; and infrastructure. The automotive sector had added challenges, such as being unable to receive reliable parts; a lack of entrepreneurial skills; and the onerous and expensive accreditation processes.
Collaboration was key to growing small businesses. “We need to focus on the informal sector, but also ensure that industry bodies are included.”
Skills development was crucial, she added. “We have to find meaningful solutions.”