The Eastern Cape Development Corporation (ECDC) this week launched the R50-million Automotive Operator Blended Finance Scheme (AOBFS) designed to boost opportunities for micro, small, and medium-sized automotive component suppliers and aftermarket service providers in the province.
ECDC chief executive officer, Ayanda Wakaba, said the focus on this segment of the market is a bid to bridge current funding gaps facing small and medium operators due to resource constraints, lack of an elaborate business history, lack of collateral, informal nature of business operations, and barriers to market which affect access to opportunities.
The scheme is offered on a 70% loan and 30% incentive basis to applicants who must be individuals and/or companies that have been in operation for 12 months and are majority black-owned.
The minimum disbursement figure is R300,000, up to a maximum of R1 million, which will go towards securing buildings, equipment, machinery, stock, accreditation, and employee training.
Left to right: ECDC CEO Ayanda Wakaba, ECDC Board Member Pumeza Bija, Cacadu Development Agency CEO Eldrid Uithaler, and National President of the APMMA Sisa Mbangxa.
A first of its kind
Proponents of the AOBFS herald the initiative as the “first of its kind” in South Africa.
The Eastern Cape accounts for 46% of the country’s automotive production volumes and as much as 56% of its vehicle exports, with many aftermarket service providers and component suppliers being involved in this supply chain alongside original equipment manufacturers such as Isuzu and VW.
“However, there is a realisation that the automotive industry needs to adopt transformation initiatives to empower historically disadvantaged individuals to participate in the industry value chain. It must provide opportunities for new entrants to enter the industry, and to foster meaningful participation,” said Wakaba.
This segment of the market is ripe for support considering that original equipment manufacturers and component suppliers employ about 60,000 people in the Eastern Cape alone.
“The Automotive Operator Blended Finance Scheme intends to exploit the potential of the sector by using this funding instrument to attract more service opportunities for this targeted group,” said Wakaba.
“The blended finance approach is meant to stimulate the sector and support increased job creation security among micro, small, and medium operators.”
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