ECDC announces R50m scheme to boost small black auto businesses

The Eastern Cape Development Corporation (ECDC) has launched a R50-million blended finance scheme to aid emerging Eastern Cape-based micro, small and medium-sized automotive component suppliers, as well as aftermarket service providers.

ECDC CEO Ayanda Wakaba says the focus of the Automotive Operator Blended Finance Scheme is to bridge the funding gaps facing small and medium-sized operators owing to resource constraints, lack of a business history, the absence of collateral, the informal nature of their business operations, as well as barriers to market that impact access to opportunities.

The scheme is offered on a 70% loan and 30% incentive basis to applicants who must be individuals and/or companies which have been in operation for 12 months and are majority black-owned.

The minimum disbursement figure for the blended finance scheme is R300 000, up to a maximum of R1-million.

“The scheme is mainly targeted at the emerging operator segment in the form of aftermarket operators (services and components),” says Wakaba.

“It will fund fixed fixtures, equipment, machinery, stock and other distinct critical industry compliance or operating environment improvement measures, such as a specific accreditation, growth programme or specialised training.

“The blended finance scheme intends to increase the number and size of the operations of emerging automotive component suppliers and aftermarket service providers, while transforming others into large-scale automotive operators.”

Wakaba believes this segment of the automotive market is ripe for meaningful support, considering that the Eastern Cape’s original equipment manufacturers (OEMs, or vehicle manufacturers) and component suppliers employ about 60 000 people.

“The province’s aftermarket operators are made up of a considerable number of small black operators which are a source of employment and livelihood for many families.”

African Panelbeaters and Motor Mechanics Association president Sisa Mbangxa says the scheme is the first of its kind directly targeted at emerging automotive component suppliers and aftermarket service providers.

“This blended finance scheme is critical in supporting the growth of our members. Access to finance packages like these helps emerging suppliers to compete effectively in the automotive industry.

“This is good news for our 85 members in the Eastern Cape and by extension the 350 members that form part of our national footprint.”

Wakaba adds that there is a realisation that the automotive industry needs to empower historically disadvantaged individuals to participate in the industry value chain.

“Considering the varied nature of the prevailing empowerment and industry transformation barriers, we are cognisant that this blended finance intervention will not resolve all the identified challenges.

“Efforts by both the public and private sector towards transforming the sector must be backed by resources to achieve this purpose.”