Statement by the MEC for Economic Development, Tourism and Environmental Nomusa Dube-Ncube following the signing of a MoU aimed at fast-tracking the entry of disadvantaged communities into the Automotive Sector and entire value chain.
I wish to congratulate the hard working technical team that has ensured the signing of a Memorandum of Understanding involving the South African Technicians Association and our entity - Ithala Development Finance Corporation Limited and its subsidiary, Ithala SOC - the financial services provider.
Following the signing of this MoU, we can state without a shadow of doubt that the wheels of radical economic transformation have been oiled.
As part of the revitalization of the township economy we have taken a decision to assist emerging entrepreneurs that are involved in the automotive industry. This is part of reengineering our economy post COVID-19.
We have agreed to ensure that though Ithala SOC we provide the following services to the members of SATA:-
- Corporate banking;
- Retail banking;
- Insurance products to qualifying suppliers, licensees, service providers and/or any other qualifying individuals/ entities participating or wishing to participate in the automotive repair sector;
- Provide support in relation to enhancing meaningful participation of historically disadvantaged individuals in automotive repair sector.
Over the years this industry has had a profound and wide-ranging effect on the city and suburban communities. We want the impact of the sector to be felt in the township and rural communities.
I am saying this because an automotive repair or service facility located in the city and suburbs has a jobs multiplier of 3.6. This means that for every one job at the facility, there are an additional 2.6 jobs supported in the local economy.
More inner-city residents are hired to work in these centres located in urban settings. These residents often live close to the facility, and they tend to spend their disposable income where they live—thus when people live and work in a community, the jobs multiplier effect of the rand spent only increases.
We want the same benefits to be felt in the township and rural communities. COVID-19 has taught us that nobody must be left out of economic opportunities as this will create social instability.
The fact of the matter is that there are millions of cars in the township and rural areas that require repair and service. We are already in negotiations with big players in the automotive industry and we want them to use these Auto Repair Centres.
In addition, we have said government departments across the province must use these centres for the repair of government fleet.
Undoubtedly, this is an area where jobs will be created to absorb thousands of people who lost their jobs during the lockdown. We want township based young people, who are trained as artisans and mechanics, to work in these repair automotive centres.
In this regard, Ithala Development Finance Corporation shall, subject to its own financing criteria and policies offer the following products and services:-
- Provide access properties owned by Ithala where service providers in the automotive repairs sector could locate their businesses;
- Asset based finance;
- Working capital;
- Bridging finance and other relevant credit facilities and financial assistance to new entrants and existing service providers in the automotive repairs industry;
- Provide concessionary and other discounts including but not limited to business loan repayment holidays for SATA members.
Critically, the signing of the MoU, paves the way for the department and its entities to collaborate with SATA to ensure that more than 36 members of the organization are able to provide the following services to all tiers of government within the fleet management value chain:
- Fleet service and maintenance;
- Tyre and window fitment, exhaust and battery changing;
- Panel beating and spray painting;
- Establishment of an automotive incubator for skills development and transfer;
- Automotive mechanical workshops for heavy duty and agricultural maintenance, engine overhaul and body work
As part of second tier of opportunity generation, SATA has furthermore identified the following niche opportunities:
- Mobile service workshops;
- Government fleet disposal;
- Towing and logistics services.
It should be remembered that the automotive sector has suffered billions of losses as a result of COVID-19. This has resulted in job losses with millions of people facing the jaws of abject poverty.
Ahead of the outbreak, we were moving with speed to ensure that our Automotive Supplier Park SEZ, located in the South of Durban, is operation in 2021. We had projected the creation of 1339 jobs through an investment of R2.2 billion.
I must hasten to add that we even had successful negotiations with TOYOTA. The automotive manufacturer agreed to be one of our tenants in our Supplier Park.
We wish to reiterate our commitment to ensure that we move with speed to resuscitate those negotiations with Toyota and many other companies involved in the sector.
We can report that we agreed with Toyota South Africa that they should lobby automotive suppliers to its patent company in Japan to locate their operations in our SEZ.
It is important to point out that ahead of lockdown, we were excited by the fact that Toyota was about to start assembling new Hino 500 series truck here in Durban. These would be exported to Europe and Africa. We expect this province to earn foreign currency with our export capacity being boosted significantly.
One can never over-emphasise the contribution that has been made by Toyota into our economy. The company spends R24, 2 billion on procurement with previously disadvantaged communities benefitting.
Employment in the sector in KZN
Ahead of lockdown our figures showed that the entire Transport Equipment sector employed more than 14 815 in the province and 9 242 people in eThekwini
I am mentioning here companies such as Toyota, Bell Equipment, Mahindra and many SMMEs in the retail sector
What we are undertaking to do as part of ensuring recovery in this sector is to be aggressive in our approach aimed at attracting new investments into our Automotive Supplier Park.
We want to ensure that jobs are created in the provision of bulk infrastructure development
We also want to promote innovation and localisation in particular through the manufacturing of the first South African Car in KZN.
- In Kenya they have Mobius;
- In Uganda they have Kiira;
- In Malaysia they have Proton;
- In India they have Tata;
- In KZN we want to have our own brand.
In addition, we have planned to invest more in Research and Development (R&D) Infrastructure to promote Electronic Vehicles. This is an area we want to explore in order to re-engineer the sector.
Enquiries:
Ndabezinhle Sibiya
Cell: 082 375 4742
Nathi Olifant
Cell: 060 970 5113
Skhumbuzo Makhanya
Cell: 072 981 2022
