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

The Star Early Edition - - INSIDE -

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

LINE-UP FOR CHANGE: Labour Min­is­ter Mil­dred Oliphant, head of the eco­nomic trans­for­ma­tion sub­com­mit­tee Enoch Godong­wana and party spokesper­son Zizi Kodwa at the ANC’s pol­icy con­fer­ence in Jo­han­nes­burg.

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