SMMEs are levers of innovation-led industrialisation that can diversify and decarbonise SA’s economy

By Mandla Mpangase

The 2025 Naacam Show is taking place at a time when the automotive sector is undergoing transformation that is driven by technology and decarbonisation.

“We meet as the global economy faces strong headwinds brought about by new shifts towards unilateralism and protectionism,” the Minister of Small Business Development, Stella Ndabeni, said in her address on the second day of the show, 14 August 2025.

“We know the US tariffs will impact the market competitiveness of OEMs, including those located in (the Eastern Cape).”

This year the Naacam Show is taking place in Gqeberha in the Eastern Cape, displaying the capabilities within South Africa’s leading manufacturing sector.

TASEZ too is attending the Naacam Show, sharing information about the special economic zone.

Emphasising the tone set the day before by the Minister of Trade, Industry and Competition, Parks Tau, Ndabeni emphasised that failure to position the country strategically and reprioritise aspects of the South African Automotive Master Plan, could see us falling behind.

“This is something all of us need to galvanise around,” she said.

“We know we need to tweak our model. Rebates on imports have improved the competitiveness of OEMs but has not enabled the development of local supplier capabilities.

“We haven’t built the necessary capabilities in design and innovation, and in specialised components.”

The Naacam Show, the minister noted, is more than an industry exhibition. It is a platform to benchmark where South Africa stands as a supplier of components, and provides insights into what the government, original equipment manufacturers, and representative bodies like Naacam need to do to position themselves in a rapidly changing industry.

“The overall competitiveness of the South African automotive sector depends on the extent to which we can master vertical integration across the value chain,” Minister Ndabeni added.

“Shared economic infrastructure like automotive supplier parks and special economic zones have played an enabling role in promoting such integration, as have industry clusters.”

Like the Tshwane Special Economic Zone (TASEZ), the Department of Small Business Development is committed to the inclusion of small, medium, and micro enterprises (SMMEs), including the automotive sector.

“The reality is: without deep transformation, the sector will not meet the inclusive growth targets set out in the South African Automotive Master Plan 2035 (SAAM 2035,” Ndabeni said.

With its focus on developing SMMEs, the Department of Small Business Development, together with the Automotive Industry Development Centre (AIDC) and the International Labour Organisation (ILO), completed a detailed feasibility study for the establishment of a Gauteng-based automotive cluster.

“The study confirmed that such a cluster is not only feasible, but strategically necessary to address coordination gaps, improve supplier readiness and deepen SME integration in the value chain, especially the production of high-quality components by SMEs.” 

In addition, department, through the Small Enterprise Development and Finance Agency is leveraging strategic partnerships to support SMMEs through:

• The Automotive Industry Transformation Fund, which will support 20 black-owned SMMEs through funding, training, development initiatives, and market access programmes.
• Developing a dedicated incubator with TASEZ to deliver joint infrastructure, skills, and market access programmes.
• AIDC Incubators: We continue to support incubation hubs to build enterprise capacity and readiness.

“These partnerships are grounded in co-investment, shared learning and the common goal of expanding opportunities for small businesses in the automotive space.”

The Department of Small Business Development also has targeted financial tools to help SMMEs, such as:

• The Small Enterprise Manufacturing Support Programme – offering cost sharing grants up to R15-million for production upgrades and localisation.
• The Supplier Development and Asset Assist Programmes – providing grants

and equipment to enable small suppliers to meet industry standards.

• The Small Enterprise Development Agency Technology Programme – funding testing, quality systems, and

productivity tools needed for industry alignment.

The minister pointed out that in her 2025/2926 budget vote speech she announced that the department would support one million SMMEs.

“I announced the establishment of a development fund, capitalised at R2.95-billion over the medium-term expenditure framework (MTEF) targeting new entrants including micro and informal businesses,” Ndabeni said, encouraging micro enterprises in the automotive after-care and services market to apply.

Announced at the same time, were the establishment of a commercial fund for more high growth SMMEs capitalised at just under R1-billion over the MTEF, a women’s fund capitalised at R300-million, and a youth fund also capitalised at R300-million.

Ndabeni also spoke about South Africa’s Presidency of the G20 this year, noting that the Department of Small Business Development would leverage South Africa’s role to position SMMEs and startups as critical levers of innovation-led industrialisation that diversifies and decarbonises the economy.

“This is especially relevant in sectors like automotive manufacturing, where innovation, localisation and inclusive industrialisation go hand in hand. You cannot do one without the other, and we must build a coherent eco-system to enable such integration.”

The minister concluded her address emphasising the country’s commitment to ensuring SMMEs are at the forefront of the industry, as innovators and entrepreneurs, as small producers, as solution providers and as global players.