Small business development minister Stella Ndabeni-Abrahams has launched a R3.4 billion masterplan aimed at intensively uplifting small, medium and micro enterprises (SMMEs) in the Eastern Cape's automotive corridor. The initiative is a collaboration between her department, the provincial government, original equipment manufacturers, the municipality and other stakeholders. The goal is to boost local production, reduce reliance on imports and integrate small businesses into the sector.
The launch in Gqeberha forms part of nationwide consultations for the government's new One MSME Plan, which seeks to coordinate South Africa's fragmented small-business ecosystem. Ndabeni-Abrahams emphasized that the focus is not solely on producing more vehicles but on identifying products that can be manufactured locally by SMMEs. She highlighted that South Africa's automotive localisation rate stands at 39%, significantly below the 60% target.
The Eastern Cape's automotive sector presents a substantial opportunity for growth, with last year's "basket" of original components and replacement parts valued at R258.5 billion. Ndabeni-Abrahams encouraged SMMEs to explore this potential and manufacture products competitively. She also emphasized the need for entrepreneurs to understand the state's frameworks and financing requirements to access funding.
Entrepreneurs at the conference echoed the need for more opportunities for local suppliers. Matha Madaka, a Tier 2 and 3 component supplier, criticized financing structures that often leave startups rejected by buyers due to a lack of track record, while financial institutions deny them capital due to a lack of a balance sheet. Madaka challenged the state to address the restrictive business environment.
Khanyisile Cholo, a localized equipment specialist, highlighted the "chicken-and-egg" trap facing female manufacturing entrepreneurs. Suppliers struggle to secure funding without commercial offtake contracts, while tier-one players are hesitant to award offtake agreements until production infrastructure is operational. Ndabeni-Abrahams acknowledged these challenges and emphasized the need for collaboration.
Ndabeni-Abrahams also addressed concerns about corruption and factionalism in the small-business sector. She urged entrepreneurs to report instances of public servants illicitly securing state tenders and warned that proposals submitted outside gazetted state plans will not receive funding. The minister encouraged entrepreneurs to understand the state's frameworks and financing requirements.
Nelson Mandela Bay mayor Babalwa Lobishe pledged the metro's support for small businesses through partnerships with the national department. The Automotive Industry Development Corporation's (AIDC) Ricardo Tevez noted that the ongoing review of the Automotive Production and Development Programme (APDP) must provide a vehicle for small business growth. The initiative aims to create jobs and stimulate economic growth in the region.
Key points
- The R3.4 billion masterplan aims to uplift SMMEs in the Eastern Cape's automotive sector.
- The initiative seeks to boost local production, reduce reliance on imports and integrate small businesses into the sector.
- The launch forms part of nationwide consultations for the government's new One MSME Plan.
