Small business development minister Stella Ndabeni-Abrahams has officially launched a R3.4bn masterplan targeting intensive upliftment of SMMEs in the province’s automotive corridor.
Hosting a business breakfast at the Boardwalk ICC in Gqebera on Tuesday, Ndabeni said her department was working with the provincial government, original equipment manufacturers, the municipality and other stakeholders on a range of interventions to boost local production, reduce reliance on imports and integrate small businesses into the sector.
Ndabeni said SA’s automotive localisation rate sits at 39%, well below the 60% target.
Last year’s R258.5bn “basket” of original components and replacement parts presents an opportunity to identify products that can be manufactured at home by micro, small and medium enterprises, she said.
“Our interest is not simply in producing more vehicles,” Ndabeni told the breakfast.
“Within that import basket, what can realistically and competitively be manufactured in SA? Which components can be manufactured by MSMEs?”
The Gqeberha gathering forms part of nationwide consultations for the government’s new One MSME Plan, which seeks to coordinate SA’s fragmented small-business ecosystem.
The AIDC’s Ricardo Tevez said while manufacturing powerhouses like Thailand have achieved 70% localisation, SA has historically hovered closer to 30%.
He said the ongoing review of the Automotive Production and Development Programme (APDP) must provide a vehicle for small business growth.
Nelson Mandela Bay mayor Babalwa Lobishe pledged the metro’s support for small businesses through partnerships with the national department.
The need for more opportunities for local suppliers was echoed by entrepreneurs at the conference.
Matha Madaka, a Tier 2 and 3 component supplier, slammed financing structures that leave startups rejected by buyers for lacking a track record, while financial institutions deny them capital for lacking a balance sheet.
“Our problem is that credit committees of financial institutions have too much power,” Madaka said, ahead of an industry meeting with financial institutions on 29 September.
He challenged the state to “institute a revolution” in the restrictive business environment.
Khanyisile Cholo, a localised equipment specialist who recently worked for Mercedes-Benz in China, highlighted the “chicken-and-egg” trap facing female manufacturing entrepreneurs.
Suppliers cannot secure funding without commercial offtake contracts, while tier-one players will not award offtake agreements until production infrastructure is operational.
Ndabeni also confronted concerns about corruption and factionalism in the small-business sector.
Addressing public servants illicitly securing state tenders, she said private-sector businesses can also enable the practice.
“It’s you colleagues that agree to front for public servants and other employees,” Ndabeni said.
“Because you want to benefit. You are inside, why don’t you expose it? Because you have evidence of everything.”
She urged entrepreneurs to understand the state’s frameworks and financing requirements.
“Entrepreneurs must make it their responsibility to understand what it is that we do for whom,” she said, warning that proposals submitted outside gazetted state plans will not receive funding.
“The trick is to know your business, know the ecosystem that regulates it, and know what the requirements of any financing institution are. Don’t give up. You apply today, they decline you, try again tomorrow.” — with Algoa FM News
Daily Dispatch