AITF drives inclusive funding in SA auto industry

From the newsletter

Jabulani Selumane, the CEO of the Automotive Industry Transformation Fund (AITF), has expressed strong confidence in the fund's trajectory at the South African Auto Week in Cape Town this October. Since its inception in 2020, the fund has invested $33.74 million in 67 companies across the automotive value chain and aims to support 90 companies by 2029.

• The fund was initially established as an Equity Equivalent Investment Programme (EEIP) by seven major OEMs: BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen.

• It was specifically designed to support Black-owned businesses across the entire automotive value chain, from panel beaters and dealerships to component manufacturers (OEMs). 

More details

• As a leader in the African automotive sector, South Africa has implemented supportive policies to stimulate industry growth, including the Automotive Production and Development Programme (APDP 2), a long-term vision extending to 2035 with various incentives and rebates.

• To align with this plan, the AITF is diversifying its offering to entrepreneurs across the value chain and removing traditional barriers to funding.

• Speaking at the event Jabulani said, “We’re removing the traditional barriers that have kept many Black entrepreneurs from accessing the funding they need. Our aim is to provide low-risk, flexible financing that aligns with the realities of the automotive industry so that our beneficiaries can focus on growth without being weighed down by financial strain.”

• To promote localisation and broader participation, the fund is expanding its focus to include Tier 1 manufacturers, with a target of 30% funding allocated to women-owned businesses to promote gender equity.

• In its new strategy, the AITF's support will go beyond funding to provide market access and crucial business support. 

• The fund will target key areas in South Africa's automotive sector, such as new energy vehicles (NEV) infrastructure, battery manufacturing, and sustainable production methods.

• Looking ahead, Jabulani believes that collective and strategic partnerships will be essential for sustainable growth.

Our take

• Funding, especially affordable funding, is a big hurdle in Africa, even more so when substantial investment is needed. The automotive industry, being capital-intensive, can lock out many aspiring entrepreneurs willing to take the risk of investing in such a demanding market.

• AITF's specific focus on women and Black entrepreneurs in South Africa could help bridge the gap of expensive bank loans, giving these entrepreneurs a head start on their investments. 

• Diversifying and expanding the fund is opportune, especially now as South Africa plans to localise and scale up EV production.