15 June 2017

South Africa: Department of Trade Engaging GM On Finding a New Investor

Cape Town — Deputy President Cyril Ramaphosa says the Department of Trade and Industry (dti) is currently engaging General Motors South Africa with a view of finding a new investor for part of its SA operations.

This comes after the announcement by the multinational vehicle manufacturer in May of its intention to disinvest from South Africa by the end of 2017.

As General Motors prepares to leave South Africa, the company entered into talks with Japanese corporation Isuzu to take over part of its assets.

"The manner and timing of the General Motors decision to withdraw from South Africa did not allow for any meaningful intervention prior to the decision.

"Nevertheless, an urgent process has been put in place by the Department of Trade and Industry to engage both General Motors and Isuzu with a view to ensure everything possible is done to support the production of Isuzu vehicles in South Africa.

"They will also explore the possibility that a new investor can take over the part of the General Motors facility not sold to Isuzu to produce other vehicles, possibly in another market segment or as a contract manager," he said.

He said an announcement will be made in due course.

The Deputy President said the decision by General Motors to pull out of SA comes on the back of sustained efforts by government in recent years to assist the company.

He said General Motors had informed government that it has not performed well in the domestic market recently, both in terms of production and sales.

He said the lesson that can be drawn from the experience is that the global automotive industry is a highly dynamic and competitive market in which companies make decisions based on their global strategies.

"We are told that the decision by General Motors is informed by its global strategy, which includes exiting other markets such as Australia and India.

"In an increasingly competitive global market, countries compete for investment and production in the context of decisions made by global manufacturers," he said.

He said that against this background, government is engaged in an automotive policy review and strategy process, working closely with a wide range of companies and industry associations.

"This process will develop a 'Post 2020 Automotive Masterplan', which will serve before Cabinet later in the year."

Investors eyeing SA's renewable energy sector

The Deputy President said, meanwhile, that at last month's World Economic Forum on Africa in Durban, Team South Africa - consisting of government, labour, business and civil society - used the event to position South Africa as a destination for business and investment.

"There was a particular focus on creating the conditions necessary for the diversification of Africa's economies and the development of its industrial base.

"The expansion of energy generating capacity and infrastructure was identified as essential to this effort, particularly the use of abundant renewable energy and the exploration of innovative financing mechanisms.

"South Africa's experience in its renewable energy independent power producers programme was considered with particular interest."

He said at the conference, a need was identified for the development of policies that deepen African financial markets for financial inclusion, particularly for SMMEs and entrepreneurs.

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