The new way of doing business
The radical economic transformation agenda provokes an array of sentiments, but must be embraced and accepted as essential for South Africa, writes
AMID the scepticism surrounding the concept of radical economic transformation, the automotive industry, one of the leading industries in South Africa in terms of job creation and impact on other industries, has forged ahead in openly embracing it.
This is significant in light of the recent furore surrounding General Motors which saw it pull its investments out of the country. This undoubtedly led to increasing concerns about the economy and may have had a ripple effect on other companies in the country.
The motor industry accounts for 7.4% of gross domestic product (GDP), 33% of manufacturing output in the country and for 58% to 60% of all production on the African continent.
The industry exports vehicles and components amounting to R171billion to 154 countries around the world.
These figures show the magnitude of the SA motor industry’s operations and how vital it is within the radical economic transformation framework.
The motor industry, under the banner of the National Association of Automobile Manufacturers of SA (Naamsa), has pledged its commitment to ensuring the continued growth of the industry and identifying key imperatives that will allow it to remain a significant part of the economy.
Representing the industry, the CEOs of BMW SA, Nissan SA, and Toyota SA went on television, outlining this first-of-a-kind initiative and forthrightly embracing this transformation and future growth agenda.
Although many businesses become uncomfortable at the mention of the term “radical economic transformation”, we remain committed to ensuring that we explain what it means and that people come to terms with it.
The focus remains the issue of growth, and particularly that this growth is inclusive within the framework of radical economic transformation.
This heeds the call for visible participation of black entrepreneurs and black industrialists within the sector, which still remains a concern of ours 23 years after the inception of democracy.
As we approach the ANC elective conference in December, we must be able to ensure that there has been implementation. This will require not only government but also industries to readjust their plans and look at issues differently so we can be partners in changing the structure of the economy.
In the face of the controversies surrounding the radical economic transformation agenda, we have been able to reach a common understanding with the automotive industry to identify changes that are essential for the growth of the South African economy and are able to correct the challenges the country faces.
A multitude of engagements and discussions around transformation has taken place with leading policy makers within the motor industry in the past six months.
This will be an ongoing process across all sectors as we seek to highlight that radical economic transformation is an instruction from our people to the ANC that must be brought to volition in the most expeditious manner.
Hence we have escalated the already strong partnership involving the automotive sector with government and in particular with the Department of Trade and Industry.
The strong positive policy environment must be commended. It has without doubt created certainty and has resulted in the motor industry taking a long-term view to growing investment.
Our engagements with the automotive industry have culminated in a vision for the future in the form of the South African auto master plan. It has four targets which must be achieved by 2035 and ushers in a new phase in the motor industry in South Africa.
The targets include increasing total manufacturing volumes from the current levels of 0.65% of the global manufacturing volume to 1% which would result in a total of 1.4 million vehicles being produced in South Africa; increasing local content from 38% to 60% and doubling employment in the industry and doubling the number of black-owned enterprises.
To achieve this, the motor industry has developed a range of action items in the form of six key pillars.
These are the development of a strong domestic market, regional market development, increased localisation, infrastructure development, technology and associated skills development and, perhaps most importantly, transformation of the industry. The approach will be accelerated inclusive of a wide range of activities to transform the industry.
The industry has also recognised that this transformation is very broad and includes procurement, investors, dealer network, supplier base and training development.
Perhaps the most groundbreaking part of this initiative is the establishment of the original equipment manufacturing transformation fund.
The fund will equip the industry in addressing three major areas: job creation, local supply chain and transformation.
The fund will have resources equating to billions and will be downstreamed for training to organisations.
It will seek to provide financial and management support and to enable these companies to become suppliers.
The other approach will be to look into black dealer ownership to provide financial support and business acumen to ensure sustainability within the industry.
The motor industry has unequivocally acknowledged its commitment to ensuring that it lends all the resources at its disposal to ensure radical economic transformation is effected.
Pursuant to this we will be engaging in a summit in July to engage all our constituencies and black business leaders on the intricacies of the plan.
We will continue to tirelessly engage with all other sectors to allay any misconceptions and reinforce the guiding principles involved in radical economic transformation.
The motor industry, in pledging its support to radical economic transformation, has allowed us to move away from a controversial debate and instead focus towards action plans and clear targets.
This indeed will create great strides in transformation of the industry. It is imperative that we are in a position to show progress and development at the elective conference when we assess the decision that was taken toward radical economic transformation at the Mangaung conference in 2012.
Complacency is not tolerable and thus we hope that when we leave the elective conference in December we are able to continue our efforts across all sectors to ensure radical economic transformation is an ideal that all the people of South Africa fully comprehend and embrace.
Collaboration is key as this transformation will require all critical stakeholders in government and in the private sector to put their shoulders to the wheel and give effect to an ideal that has been 23 years in the making. Mkhize is treasurer-general of the ANC