SA needs a more united ideology to help drive the economy

Like many business leaders, Andrew Kirby, president and CEO of Toyota SA Motors, is concerned about the state of the local economy. His biggest concerns centre on the social impact of a struggling economy and the country’s lack of a common ethos. 

“To get SA past this current economic crisis we need a well-developed common view of what the road map should look like and a more united ideology,” he says. “The absence of a common ethos is reflected in too much focus on self-interest and a lack of strong leadership with the necessary foresight to put the country back on a sustainable economic path. Instead, we have very divergent views at a political leadership level, weak governance and poor accountability leading to high levels of corruption and crime.” 

Kirby, named the 2022 Sunday Times Top 100 Companies' Business Leader of the Year, says that SA has not made enough progress in developing an aligned view on an economic and policy model that can substantially grow the economy. 

He says what SA urgently needs to return it to a more sustainable economic trajectory is stability, an improvement in critical infrastructure and upgrading the levels of professionalisation of municipalities. 

A stable supply of energy is critical for the sustainability of the country’s auto sector, which provides for about 440,000 direct jobs and contributes just under 5% to GDP. In addition to being hard hit by unstable energy supply, the sector is also affected by inefficiencies in ports, rail and roads. 

More than three quarters of locally manufactured vehicles are exported, primarily to Europe. However, these export contracts are in jeopardy unless SA manufacturers switch to new electric vehicle (hybrid, plug-in hybrid, battery electric and fuel cell electric vehicle) production given that many countries in Europe and the UK plan to ban the sale of petrol and diesel vehicles in the next few years. 

Globally, sales of battery electric vehicles have grown exponentially in recent years. In 2022, 7.7-million units were sold — up from 1.4-million units in 2018 — with this figure expected to reach over 51-million units by 2035. Local vehicle manufacturers, however, are being frustrated by the government’s failure to recognise the urgency of shifting to new electric vehicle technology. 

“The entire vehicle manufacturing sector is at risk unless the government and industry are able to agree on implementing a structured programme to accelerate the transition,” says Kirby. 

Toyota’s Durban production facilities suffered extensive damage in April last year as a result of flooding, requiring that the company crush 4,300 vehicles. Its facilities only resumed full production in July 2022. Since then, reports Kirby, there have continued to be a spate of infrastructure challenges in the city. In addition to load-shedding, power dips and leaking gas pipelines, the company has also had to contend with interrupted water supply.

In response, Toyota has made a significant investment in a 5.2-million litre water storage facility to mitigate supply issues. The company has also designed a triple-line defence system to guard against future flooding. Kirby is confident these measures will protect its plant in the event of future flooding. 

Kirby has previously told the Sunday Times that business leaders need to focus on what they can control, and not to expend too much energy on aspects out of their control. Now is the not the time for business leaders to throw their hands in the air in despair at the state of the economy, he says. 

“Business leaders have a crucial role to play in delivering and executing on key deliverables. The business sector worked very successfully with the government to roll out Covid-19 vaccinations and there is no reason that collaboration can’t be replicated in the current initiative to support the key focal areas of energy security, transport and logistics and crime and corruption.” 

He is encouraged by the government’s partnership with the business sector to address these key areas but cautions that certain elements within the government are more open to finding constructive ways to work together than others. “Encouragingly, there are pockets where the government is making positive progress.” 

In recent years, business leaders have become increasingly vocal in their criticism of the government. “It has become much more challenging for business leaders to deliver on their mandates given the many service delivery issues such as water and energy supply, sanitation and roads that they have had to respond to, so it is perhaps no surprise that business leaders are speaking up more now than they have in the past,” says Kirby.

Being outspoken is well and good, he says, but it’s not enough. “South Africans tend to be very good at criticising. We need to get better at collaborating and listening so we can find creative solutions and put some successes on the board. We then need to hold each other — and the government — accountable.” 

He’s still optimistic about the country’s future prospects. “I’m realistic about the challenges we face but continue to believe that SA has a great deal of potential which can be unlocked with the right structures and approaches in place. The fundamental issues we face — a high rate of unemployment, poor economic growth and high levels of crime — are not insurmountable and can be resolved. South Africans are a resilient bunch and we can weather this storm and find ways to overcome our challenges. In fact, these challenges can make us stronger.”

As far as Toyota SA Motors is concerned, the business plans to enlarge its footprint in the country with a bigger production hub servicing the whole of Africa.

“We’re in an investment cycle now as we make a shift away from manufacturing and selling vehicles to being a mobility provider and shifting to the manufacture of new electric vehicles,” says Kirby. 

About Sunday Times Top 100 Companies Awards

The annual Sunday Times Top 100 Companies Awards, sponsored by BCX, acknowledges JSE-listed companies with a minimum market capitalisation of R5bn, which have generated shareholder returns that outperform those of their listed peers. 

This year’s investment measurement period ran from August 31 2018 to August 31 2023. The company that has created the most wealth and value for its shareholders during this five-year time frame will be ranked SA's number 1 company.

The results of the 2023 Sundays Top 100 Companies Awards will be announced during an awards ceremony on November 9 in Johannesburg. To book a table to attend this gala event, contact Marcia Minnaar on minnaarm@arena.africa.

They will also be published in the Sundays Top 100 Companies supplement in the Sunday Times on November 12.

This article was sponsored by Arena Events.