South Africa has one of highest unemployment rates in the world, sitting at a high of 26.5% at present. High levels of unemployment put pressure on the general efficiency of an economy, affecting even the employed. When there is diminutive money to spend, a cyclical economic problem forms. Businesses and employees are affected by a decline in the number of goods consumed.
Despite all these factors, South Africa is still considered one of the Top 10 most developed countries in Africa, it has an economy that is ranked the second largest in the African economies. This is mainly because South Africa has multiple industries contributing to its economy, the Automotive Industry being a giant amongst these.
The Automotive Industry contributes over R210bn in the South African annual GDP, placing over 660,000 jobs and R84.5bn in wages. It is largely based in the Eastern Cape, Gauteng, and Kwa-Zulu Natal. Populaces in these provinces rely largely on this industry and its sub-industries, according to the AIEC’s report, it is estimated that each direct automotive job supports at least five other indirect jobs. The modern automotive industry in South Africa was launched in 1995 and has since continued to advance.
The financial responsibility for unemployed persons in South Africa falls largely on the government, with this realisation, the Government has put in place the Automotive Production and Development Program (APDP) which is designed to support and grow one of the country’s premier employers. The APDP hopes to achieve local production of 1.2 million vehicles annually by 2020 thus increasing employment opportunities.
The Automotive Supply Chain Competitiveness Initiative (ASCCI) was launched in 2013 as a measure to enhance localisation, production and supplier capabilities. Competition in this industry has significantly grown, more activity within an industry is always positive for the economy. However, global competition has also increased, thus creating difficult and challenging circumstances for the local Automotive Industry. Manufacturers are required to enhance quality, increase organisational efficiencies and drive innovative features into their products while keeping manufacturing costs minimal.
This prolific industry requires a wider source of investment, the Automotive Investment Scheme (AIS) has facilitated more public sector incentives purposed to develop and assist in the manufacturing of automotive components.
The Automotive Industry is a crucial financial contributor in the South African economy, it is responsible for a significant decrease in unemployment. Expectedly, the government has put immense drive and effort into the advancement and success of this industry, ensuring thrive and profitability. Undoubtedly the programs and initiatives put in place have contributed to the increasing growth of the local Automotive Industry.
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