Local content up in new car programme

South Africa has extended its car-manufacturing incentive programme through to 2035 to keep international manufacturers such as Toyota, Volkswagen and BMW operating plants in the country.

One of the conditions of the new raft of incentives is an increase in the proportion of vehicle components that come from South Africa to 60%, up from about a third. In return, the carmakers get tax breaks generous enough to ship vehicles to Europe.

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The government, carmakers and trade unions have been in talks for several months to update the programme, which expires in 2020.

At stake is an industry that accounts for about 7% of GDP, employing an estimated 150 000 people in a country where joblessness is rife.

The focus on local content will support suppliers, engineers and other professions that rely on manufacturers to boost employment.

It will also support blackowned businesses as part of ongoing efforts to redress economic inequality caused by apartheid.

Carmakers get guaranteed incentives for another 17 years as long as they meet certain targets.

That allows them to make decisions about investment and production of new models with some degree of certainty about the costs.

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The plan is “aspirational but also quite ambitious”, according to the National Association of Automobile Manufacturers of South Africa.

The extension also got the seal of approval from the National Union of Metalworkers of South Africa.

A rise in overall production levels from last year’s 600 000 vehicles – or less than 1% of global production – would depend on the development of markets elsewhere in Africa, Mike Whitfield, managing director of Nissan in SA, said. – Bloomberg

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Regulation in the South African financial services industry has been undergoing a major shift: from a rulesbased approach with strict criteria to being judged more on the results.

The Treating Customers Fairly framework is central to this. The regulator’s concern is whether the way providers behave and the products and services they offer lead to fair client outcomes.

This was highlighted by the recent incident where Momentum refused to pay out an insurance claim based on a non-disclosure. The public outcry, which forced Momentum to change its decision, showed that many people felt the initial decision was unfair.

Fairness, however, is in the eye of the beholder. “Who determines what is fair?” asks Billy Seyffert of Moonstone Compliance. “But,

The [new] plan is aspirational but also quite ambitious.