From the Desk of the President

3 July 2023

Dear Fellow South African,

As countries around the world work to reduce carbon emissions, there is great potential for South Africa to establish and develop new industries.

For us, reducing our carbon footprint is critical to the health and well-being of our people, the sustainability of our society and ensuring that our goods and services remain competitive into the future. At the same time, it is a great opportunity to grow and diversify our economy and create employment.

We have said that our transition to a low-carbon, climate resilient economy must be just and inclusive. We have therefore produced a Just Energy Transition Investment Plan to direct resources both to supporting workers, communities and industries affected by the shift towards renewable energy sources, and to investing in new industries like green hydrogen and electric vehicles.

This is particularly important as many of our export markets are increasingly seeking to reduce the negative environmental impact of the goods they produce and import. The European Union, for example, has decided to ban the sale of new petrol and diesel powered motor vehicles from 2035.

This has significant implications for South Africa since Europe accounts for about 60% of our motor vehicle exports. This presents both a threat to our auto industry, which mainly produces petrol and diesel vehicles, and an enormous opportunity.

This opportunity has been seized by one of the world’s largest automotive manufacturers.

Last week the BMW Group announced that it will be spending R4.2 billion over five years to prepare its local manufacturing plant for the production of the next-generation BMW X3.

The plug-in hybrid X3 will be exclusively manufactured in South Africa at BMW’s Rosslyn plant in Pretoria from the second half of 2024. While other vehicle manufacturers are producing hybrid vehicles, the X3 will be BMW’s first locally-produced electric vehicle.

The investment announcement affirms the confidence investors continue to have in our economy. It also gives effect to the principle of our transition to low carbon energy.

While there are fears that the move towards decarbonisation will result in job losses, BMW’s plans for job retention, reskilling and training on electro-mobility will provide certainty to more than 20,000 employees at the company’s facilities across the country.

Working in partnership as government, business, labour and civil society, we have to ensure that the transition to new forms of production is managed in a just, equitable manner.

Among other things, this means that auto manufacturers need to be supported to expand their investment in the production of new energy vehicles in South Africa. We currently have a range of measures to support automotive manufacturers, such as the Special Economic Zone incentives, the Automotive Investment Scheme and others.

We will soon be finalising a strategy to support the transition to electric vehicle manufacturing that is affordable and effective.

It is key that South Africa keeps up with other countries, including on the continent, that are incentivising the manufacture and uptake of electric vehicles as the world moves towards decarbonisation.

South Africa has some important advantages. We have the world’s largest reserves of platinum and are an attractive location for renewable energy, both of which are important elements in the production of green hydrogen. Such hydrogen can be used as an e-fuel in some models of vehicles, which are exempted from the EU ban.

The decarbonisation of our society can be used to drive growth, improve industrial competitiveness, create jobs and harnessing the potential of innovation.

In the State of the Nation Address in 2018, I said that “while change can produce uncertainty, even anxiety, it also offers great opportunities for renewal, revitalisation and for progress.”

Whether it is in the auto industry, energy or other economic sectors, we are confident that our country is taking the necessary steps towards a low-carbon future that leaves no-one behind.

With best regards,

Cyril Ramaphosa