Eastern Cape OEM’s contribute over R1 billion in NIP obligation

SEPTEMBER 22, 2014

The four Eastern Cape original equipment manufacturers: Volkswagen, General Motors, Mercedes Benz and Ford have met obligations well in excess of R1 billion in terms of the National Industrial Participation Programme (NIPP).

The Department of Trade and Industry’s Progress Report on the Industrial Policy Action Plan (IPAP) explains that the NIPP is “part of the four-tier levers approach to leverage government procurement approved by Cabinet in 2012”.

The programme “places an obligation on companies awarded contracts by state owned entities where the imported con-tent is US$10 million or more to participate in economic activities in the country to the value of 30% or more of the imported content”.

DTI explains that the economic activities can take the form of investment, export promotion, Research and Development, collaboration with local companies, technology transfer and “supporting the objectives of Broad-Based Black Economic Empowerment (BBBEE)”.

Mercedes Bens South Africa (MBSA) incurred NIP obligations as a result of supplying intercity coaches for the World Cup as well as supplying vehicles to the state.

The Progress Report shows that three projects, creating a total of 83 jobs with an additional 85 jobs retained, were implemented by MBSA to meet its obligations arising from supplying cars to government departments.

The manufacturing of seats belts at Atlantis in the Western Cape for the W205 Mercedes C-class being assembled in East London resulted in 85 jobs being retained.

Three jobs were created from the manufacturing of under body covers for the W205 and 80 were created from the manufacturing of module and seat structures for the W205.

No details are provided in the report as to how Ford, VW and General Motors met their NIP obligations that were all incurred from the awarding of contracts to supply vehicles to the state.

The Progress Report states that the re-view of the NIP policy places greater emphasis on Direct NIP - activities that are within the same sector as that from which the contract was awarded - with Indirect NIP, in other sectors, only being permitted “under exceptional circumstances”. - metrominutes