South Africa plans to partner with Japan to strengthen its manufacturing sector’s performance, Greg Cline, Head of Sales Blue Strata told CNBC Africa on Wednesday.
“When South Africa looks at the economy as a whole and how it can uplift it and attract foreign investment, it makes sense that the country would work together with Japan and Germany, the two major manufacturers in the country to invest in plants and create jobs, to help fuel growth in South Africa,” said Cline.
South Africa’s automotive industry accounts for 7% of the country’s GDP, employing more than 28 000 people but due to the volatility of the rand and labour issues, the manufacturing sector has declined.
Collaboration between SA and Japan to develop the industry will not only sustain and grow the sector but it will increase employment as well. South Africa produces 550 thousand cars annually and wants to increase that number to 1.2 million by the year 2020.
Sales figures released on Monday showed that the demand for cars in the first six months of the year were up 6.8 per cent but this hasn’t brought a sigh of relief for manufactures after petrol was hiked up to a record high of 95 cents per litre on Wednesday.
Currently all manufactured vehicles need to have 35 per cent of local content as a means of supporting local industry.
Government incentives through the Motor Industry Development Program have attributed to the success of the automotive industry, from giving rebates for capital expenditure for cars to stabilising tariffs for component importation.
“Essentially it’s not about pure incentives, and it’s about stabilizing the ability of business to grow,” added Cline.
According to Cline there are other areas that need to be looked at such as working capital models as businesses need cash to grow.
“70 billion rand worth of components and vehicles are imported into South Africa. We want to understand how we can make it more attractive so that we can export. At the same time we need to have trade relations with European and BRICS countries,” said Cline.