The mechanics of B-BBEE in the EC auto industry

04 September 2019 | Web Article Number: ME201916101

Government & Municipal
SMME Development & Support

IN 2016, locally based multinational vehicle and component parts manufacturers found themselves in a difficult situation as the revised B-BBEE codes and rules gave them challenges.

That’s according to Siyaya Skills Institute, which said that former Minister of Trade and Industry Rob Davies had informed the automotive sector that a B-BBEE status level 4 was mandatory if it wished to draw on the benefits of the Automotive Production and Development Programme (APDP) such as the Production Incentive and Automotive Incentive Scheme.

“When developing the South African Automotive Masterplan, the Department of Trade and Industry’s aim was to speed up transformation in the automotive industry. This included increasing the number of black-owned automotive companies in the supply chain and improving diversity in senior management,” the institute said in a statement.

The plan aimed to double employment in the motor sector from 112 000 jobs currently to 224 000 jobs by the year 2035, whilst simultaneously positioning South Africa to produce 1% of global vehicle production (1.4 million vehicles) by the same year.

According to Siyaya, the new B-BBEE codes resulted in the Eastern Cape experiencing a drive towards localisation, transformation and skills development in their automotive supply chain. This drive was initiated by the Automotive Industry Development Centre Eastern Cape (AIDC EC) in support of the Automotive Industry Master plan.

“The AIDC EC is cognisant of the importance of investing in skills development because the automotive sector is the biggest driver of jobs in the Eastern Cape. This in turn addresses the specific needs demanded of automotive manufacturers in Industry 4.0. These sorts of initiatives give hope to the automotive sector in the Eastern Cape, but corporates still need guidance when it comes to B-BBEE.”

Siyaya said the APDP had improved the automotive industry’s competitiveness since it started in 2013. “Automotive companies and their components suppliers are currently preparing for the next phase of the APDP which starts in 2021. Some of these companies have already started to change and examine how they do business.”

It added that for automotive companies to exist legally in South Africa, strict adherence to domestic laws and regulations is vital and B-BBEE compliance will enable them to benefit from the Automotive Incentive Scheme.

“The five elements of B-BBEE and the interpretation of the B-BBEE Codes may be challenging for companies, however it does not always have to be about sensitive topics such as relinquishing ownership. There are various, credible ways companies can be compliant, and ownership can be viewed as a long-term objective.

“Siyaya Skills Institute has a team of dedicated and competent B-BEE Specialists who assess businesses, provide detailed gap analyses, and create meaningful relationships with automotive clients that enable these clients to flourish in the automotive space,” the company said, adding that it had assisted hundreds of automotive companies in the Eastern Cape region.

Related Articles