Creating a fast lane for black industrialists
It’s indisputable that South Africa requires as many industrialists as possible to stimulate economic growth and create jobs. Through innovation and by creating new businesses, industrialists can generate economic value for their communities and help to spread economic power — often concentrated in the hands of a few large companies — to the disenfranchised.
In this manner, we can add more jobs than is possible when we have only a few large corporates dominating the economy.
South Africa’s inability to create broad employment opportunities is worsened by factors such as stagnant growth, stillprevalent economic imbalances of the past and the shortage of skills in key sectors.
Large corporations on their own won’t be able to create the urgently needed jobs, despite their major contribution to GDP.
That’s because those corporations often have to contend with the justifiable requirements of the regulatory environment, global competitive forces and the structural limitations of the economy.
To unlock South Africa’s huge economic potential, the Industrial Development Corporation of South Africa (IDC) supports the government’s aggressive industrialisation policy, which is designed to stimulate economic growth and create sustainable wealth.
Part of that strategy includes more participation in the economy by black industrialists.
As a development finance institution, the IDC has identified the automotive value chain as an important aspect of industrialisation in which many black industrialists can participate, with a spillover effect of more local jobs being created. That’s because the automotive sector offers the greatest potential for technological advancement, increasing skills intensity and upgrading.
Automotive is a scale- and skillsintensive industry, requiring considerable investment and advanced management practices.
The IDC has taken a principled approach to continue funding and supporting black industrialists. who want to enter and thrive in this sector; one with undoubted potential to create thousands of jobs. It has played a major development role in a number of countries and has significant potential in South Africa and the rest of the continent.
The sector has attracted considerable policy support due to its size and because it incorporates a range of manufacturing processes, including metalworking, plastics and electronics.
In addition to boosting trade and growth, the automotive sector can be crucial in deepening South Africa’s industrialisation and economic diversification, and can boost technological advances and the development of core technical skills.
South Africa is already in a good position to shift to global manufacturing value chains, thanks to its well-developed motor vehicle sector.
For that reason the IDC is playing a key role in formulating attractive value propositions for new original equipment manufacturers (OEMs) interested in entering the South African market.
Our planned multimodel OEM manufacturing facility project is gaining traction, with interest from international OEMs. It will include a logistics solution to support exporting auto manufacturers.
The IDC’s funding for this sector in the past financial year amounted to R1.3bn, which will result in the creation of 4,207 job opportunities.
As more investment is pumped into this sector, particularly in the various aspects of its value chain, the country can expect more jobs to be created.
In all its investment decisions, the IDC will ensure the inclusion of local blackowned companies in the supply chains of large automotive OEMs.
It will also provide support to the rail value chain, including the fabrication of rail components, refurbishment of railway rolling stock and locomotives, and the provision of heating, ventilation and airconditioning systems for passenger trains.
By investing heavily in the value chain of this strategic sector, the IDC can help the country achieve an economic breakthrough and prosperity for all — with a ripple effect on the rest of the continent.