Amended Automotive Production & Development Program – Phase Two (“APDP 2”) – What role does B-BBEE play?

In South Africa, the automotive industry has the opportunity to benefit from a Production Incentive, specifically designed for final manufacturers of motor vehicles, automotive tooling, and components. This incentive, managed by The International Trade Administration Commission (ITAC), aims to enhance value addition within the automotive component industry and ultimately stimulate job creation across the automotive value chain.

Understanding APDP 2 and Its B-BBEE Requirements

In July 2021, ITAC introduced regulations under APDP Phase 2, outlining eligibility criteria for the Production Rebate Certificate. A key requirement is that component and tooling manufacturers, excluding material suppliers, must be B-BBEE compliant according to the B-BBEE Codes.

However, following industry consultations, amendments were made to these regulations, providing more clarity on specific B-BBEE level requirements. The automotive industry, which comprises many multinational companies, expressed the need for more time and flexibility in implementing B-BBEE initiatives. As a result, companies now have two compliance options:

1. Achieve Level 4 B-BBEE Compliance by January 2025
2. Contribute to the Automotive Industry Transformation Fund (AITF)
   Companies opting for this route must achieve at least a Level 6 B-BBEE compliance by 2025. Additionally, they must contribute 2.75% of their annual turnover over a ten-year period. This contribution is split as follows:some text
   • 32% Cash Portion: Contributed directly to the AITF.
   • 68% Procurement Spend: Allocated to qualifying black-owned suppliers.

New Manufacturing Enterprises and B-BBEE Compliance

New manufacturing enterprises in South Africa are given a grace period of 36 months from the start of production to become B-BBEE compliant.

The Role of the Automotive Industry Transformation Fund (AITF)

The AITF was established to support multinational companies that face challenges in meeting the required B-BBEE levels, particularly in terms of ownership changes. Companies can join the Fund anytime before the end of 2035 and may exit before the ten-year contribution period concludes.

Compliance and Consequences

Manufacturers that do not meet the required B-BBEE levels or fail to contribute to the Fund will face exclusion from value-addition benefits. Additionally, ITAC holds the authority to withdraw eligible production certificates or revoke production claim applications if these requirements are not satisfied.

How Elevate Advisory Partners Can Help

To ensure your company meets the B-BBEE requirements ahead of the January 2025 deadline, contact Elevate Advisory Partners for a GAP Analysis and Strategy. We'll help you navigate these regulations and position your business for success.

Contact:
Adriani - adriani@elevateadvisory.co.za

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