A full six billion automotive industry transformation fund has been officially launched by SA motor makers and original equipment manufacturers (OEMs). It has a 10-year life span – but it appears likely its activities will extend beyond that period.
However, it is unclear what will happen to the broad-based black economic empowerment (B-BBEE) ratings of the automotive companies that invest in the fund if it closes after 10 years and whether the “once empowered” principle will apply.
Tim Abbot, chief executive of BMW Group South Africa and sub-Saharan Africa and vice-president of the National Association of Automobile Manufacturers of South Africa (NAAMSA), said the seven OEMs had to put a time limit on AITF to get approval from their parent companies for investments into the fund.
Abbot believes the OEMs will review the fund’s progress every few years – but will be surprised if the fund is closed.
“I would envisage, if it is successful and we managed to get some return out of some of the companies and money back into the pot, we will just keep on reinvesting. But who knows? At the end of 10 years we may say enough is enough and just withdraw whatever money is in there and divide it up by the seven OEMs, or by then it could be 100 companies because it may have the suppliers and importers involved,” he believes.
As to what will happen to the B-BBEE ratings of companies that invest in the fund if it closed after 10 years, Abbot said a lot could happen within that time and he’s certain the B-BBEE codes will again happen, as they have found in the past.
He confirmed there have not been any discussions with the department of trade and industry about what happens after the 10-year period and if the fund closes because “we are both going in with our eyes open and in good faith with the intention that we would want it to continue long after the 10 years.”
The OEMs must ensure they have a fund or programme in place that supports what they are trying to do, Abbot said.
The SA Automotive Masterplan is effective until 2035 and all the OEMs support the foundation of the plan, which is for South Africa to account for 1% of global production and increase jobs and local content.