Business Maverick


Automotive Business Council perturbed by effect of political instability on Nelson Mandela Bay manufacturing hub

Automotive Business Council perturbed by effect of political instability on Nelson Mandela Bay manufacturing hub
CEO of the Automotive Business Council Mikel Mabasa. (Photo: Deon Ferreira)

The chairperson of the Automotive Business Council, Mikel Mabasa, said they are worried about the effect of political instability on the Nelson Mandela Bay metro, the country’s vehicle and component manufacturing hub.

An ongoing water crisis, a lack of a consistent and quality power supply, and lacking basic municipal services are all factors that increase risk for big multinational motor manufacturing companies doing business in Nelson Mandela Bay, the CEO of the Automotive Business Council, Mikel Mabasa, said this week.

Mabasa was speaking ahead of the Nelson Mandela Bay Business Chamber’s Annual General Meeting, held in Gqeberha on Wednesday.

Nelson Mandela Bay is home to the largest component and vehicle manufacturing businesses in the country. An estimated 60% of the metro’s electricity, for instance, goes to the manufacturing industry.

“We are concerned over ongoing political instability,” Mabasa said, saying that multinationals that have their plants in the metro will share these doubts over the ongoing instability in the country. 

Shaking investment

“They look at these markets around the world very carefully and if they are not comfortable, they may withdraw investment,” he said. “Investor confidence is critical. Government needs to move close to businesses. At the moment the risks are very high and there are many factors impacting multinational companies that are out of their control.”

Mabasa said he believes there is enormous potential for a manufacturing hub such as Nelson Mandela Bay if the country can move to new energy vehicles in time, as the manufacturing of combustion engines will soon be winding down. “I am speaking about the next 10 to 15 years.” 

“We must invest ahead of the curve. Some suppliers have already started recalibrating their processes.” 

Read more in Daily Maverick: Investment community puts pressure on vehicle manufacturers to move with the times

Commenting on the possible consequences of South Africa’s hosting of Russian President Vladimir Putin at the BRICS summit and ongoing allegations that South Africa sold arms to Russia, Mabasa said: “The big investors from the west are getting nervous. All the big investors are from the west. The American ambassador has already indicated his displeasure … President Cyril Ramaphosa should have hosted one of his family meetings and been transparent. A simple confirmation or denial would do.” 

He said the industry was also not “persuaded” that rolling blackouts will be something of the past any time soon. 

Best industrial option

“But South Africa remains the best industrial option for us on the continent. It remains an attractive destination and has an excellent incentive program,” he added. “If we can turn a concern and attract new investments, not just vehicles but also in the component industry,” he said. 

He said the country has huge potential as six out of the ten minerals needed to manufacture batteries for new energy vehicles are in South Africa and not just “scattered around”. 

“We have some of the biggest reserves,” he said. 

“This will provide us with an absolute opportunity to create a new era,” said Mabasa. And instead of exporting these minerals to China, a new strategy should be implemented to create a battery manufacturing industry next to the mines. “This is a huge opportunity for us as a sector and we are already working with the mining industry,” he said.

But Mabasa added that it is imperative that the right people are elected and appointed at metros, provincial governments and national level. 

Agility and resilience required

“South Africa is currently operating in a radically different environment which requires out-of-the-box thinking, agility, resilience and collaboration,” Loyiso Dotwana, president of the Nelson Mandela Bay Business Chamber, said during the organisation’s Thirteenth Annual General Meeting on Thursday. 

“Our country is in a very serious state, with extreme load shedding now the norm, and our rail system, ports, and roads all in a dismal state. 

Couple this with the political drama which has unfolded in many of the country’s metros and municipalities, which has included this metro,” he said.

Dotwana highlighted that since 2016, Nelson Mandela Bay has faced political instability with coalition governments coming and going, along with having six different mayors.

“Furthermore, since 2016, the municipality has had 12 acting City Managers. It is therefore no surprise that this all has had a detrimental impact on the administration of the metro and the delivery of basic services.

“We face an economic survival crisis that requires all of us to pull together for the greater good of our local economy and jobs. This is not the time for political or personal agendas to determine the way forward. Rather, we should focus on being transparent about what the issues are, and how can we solve them as a united front.”

Answering criticism that the interventions by the business chamber were an attempt to take over the role of local government, Dotwana said it was important to involve all the relevant stakeholders, and to take action to save investment and jobs through this emergency period.

“The chamber remains apolitical and will work with stakeholders and partners who will do the right thing,” he said.

Signed memorandum of understanding

The Nelson Mandela Bay municipality and the chamber have signed a memorandum of understanding, offering assistance to the metro where service delivery issues are impacting businesses.

Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, said they also negotiated a 24-hour Stage 5+ voluntary load shedding schedule, which works better for the manufacturing industry rather than one lasting a few hours a day. So far, 35 businesses were approved for this programme. 

She said the municipality had also been successful in obtaining a court order to prevent municipalities from adding additional increases to their electricity tariffs as a result of their own inefficiencies.

Independent power generation

Dotwana said while it was pleasing that the country’s regulatory environment around independent power generation has been eased, more still needs to be done to accelerate renewable energy adoption.

“A major concern we have is that renewable power that is initiated from any location in the country simply goes back to the national grid. Our view as the chamber is that what the business community invests at its own cost, must directly benefit the metro as a whole.

“As we bring more power onto the grid, this should directly reduce levels of load shedding for our entire metro.

“As part of our collaborative approach, we have offered the municipality technical skills through the broad Adopt-A-MOU currently in place,” he said. “We have also prioritised lobbying local government for solutions to address vandalism on key infrastructure including electrical substations, water pump stations, sanitation pumps and railway lines.”

Vandalism has led to millions of rands in damage to Nelson Mandela Bay substations and also to extensive power outages.

“We are the most manufacturing-intensive metro in the country and to

support our ongoing survival, we need efficient road, rail and ports infrastructure. Our metro has a huge advantage of two ports and if these ports become more efficient and the rail corridor between the north and south becomes functional again, then we can really turn the Nelson

Mandela Bay into a world-class logistics hub for imports and exports,” he emphasised.

Countered Van Huyssteen: “As organised business, we do not believe that whining solves anything and that we should rather focus on what’s within our control and take action where we can. On this score, we are very appreciative of the high levels of volunteerism which are growing within our local business community, and which are directed at pulling together to save investment and jobs.” DM


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