The International Finance Corporation (IFC), a member of the World Bank, will assist in financing BMW Group South Africa’s (BMW SA’s) R6-billion investment in its Rosslyn plant, set to produce the new BMW X3.
The $150 million loan comes as South Africa “seeks new sources of economic growth after a period of slowdown, driven in part by sluggish mining and manufacturing sectors”, says the IFC in a statement.
“The country suffers from unemployment estimated at 27% overall and nearly 50% among youth.”
The auto industry is South Africa’s largest manufacturing sector.
Nonetheless, local content accounts, on average, for about one-third of each vehicle produced in South Africa.
The IFC estimates that raising that share of local content to 45% could inject $4-billion into the local economy and support 80 000 more jobs over the next three years.
“[The] IFC’s partnership with BMW SA supports the transfer of technology and workforce skills from global auto manufacturers to local suppliers,” says IFC head of manufacturing, agribusiness and services in sub-Saharan Africa, Mary-Jean Moyo.
“Further investment will help make domestic companies more productive and capable of paying higher wages and contributing more through taxes.”
Investments in manufacturing are an important part of the IFC’s regional strategy, because of the sector’s importance in generating jobs and its ability to make other industries, such as agribusiness, health and infrastructure, more efficient and competitive.
In the 2016 financial year, the IFC committed $1.4-billion in new manufacturing investments around the world.
“This partnership between IFC and BMW will help South Africa create highly skilled jobs and wages through deeper participation in the global automotive supply chain,” notes Trade and Industry Minister Dr Rob Davies.
“It is aligned with the industry’s development vision of significant growth in domestic vehicle production and increasing local content and employment across the automotive supply chain.”