Deputy Finance Minister David Masondo announced that South Africa plans to offer financial assistance to the monitoring industry as it shifts towards manufacturing electric vehicles.
The funding will be included in the midterm budget on 25 October, which comes at a challenging time for government revenue and the risk of not meeting its debt stabilization goal.
The objective is to promote investment into the production of EVs and their components “comes at a time when the focus is particularly stretched”, Masondo said in an address to the industry.
“The only way to justify the government’s fiscal support to the sector is through greater localisation and more component production opportunities.”
According to the Automotive Business Council, the motoring industry contributed 4.9% to South Africa’s GDP and accounted for 12.4% of exports in the previous year. The industry directly employed approximately 110,000 individuals.
Masondo cautioned that changes in the market and the progress of artificial intelligence posed a significant threat to job security for many workers in the industry, emphasizing the need for effective strategies to mitigate this risk.
“Around 67% of South African component exports will be lost in the transition from internal combustion engine vehicles to EVs,” he said. “This simply means that the transition will entail a fundamental restructuring of the labour market.