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German Carmakers Respond To South African Election Results

German Carmakers Respond To South African Election Results

Photo: bmwcoop.com

Labor instability in South Africa dashed BMW’s hopes of producing a new model there in 2013, but the results of election 2014 give German and other manufacturers cause for optimism, DeutscheWelle reports.

About 600 German companies employ more than 90,000 South Africans, according to the German-African Business Association.

Government intervention in the South African economy made international investors uneasy in 2013. Drawn-out strikes scared off big corporate players, particularly in the automotive and components industry — a sector that generates 30 percent of the South Africa’s manufacturing output.

The most promising outcome of the election was a surge by the opposition Democratic
Alliance (DA), thanks to a strong urban turnout, according to the German-African Business Association. The DA’s share of the vote jumped from 17 percent at the previous election to 22 percent, with 99 percent of results accounted for.

Its strong showing was “an impulse for better conditions for foreign investors,” the German-African Business Association said.

Policy change is essential to encourage investment and that, in turn, will help boost South Africa’s job prospects, the German-African Business Association said. Still, the organization said it is “cautiously optimistic that the South African government will now try to win back the trust of German companies.”

Andreas Klugescheid, a BMW spokesperson, told DW that the industrial action in South Africa in 2013 was problematic, but is now relatively stable.

“BMW is sticking to its fundamental commitment to South Africa,” Klugescheid said.

BMW is not the only company upbeat about South Africa, according to DW. An April report by the U.N. Economic Commission for Africa painted a very different picture of international investor confidence from the wary feeling of not long ago.

“German auto component group Friedrich Boysen GmbH is putting $16.4 million in a new 10,000-square-meter plant,” the Economic Commission for Africa said.

Toyota SA plans to invest about $33.2 million dollars in a parts distribution warehouse and a new assembly line in Durban, according to the ECA report. And Beijing Automotive Works plans to invest $17.9 million in a plant expected to service all of
sub-Saharan Africa.

Any anger over unemployment and government corruption at the highest levels was not enough to put a stop to the 20-year rule of the African National Congress.

Preliminary results show a comfortable majority for the party once led by Nelson Mandela, with 62.5 percent of the popular vote meaning a parliamentary majority that will give embattled President Jacob Zuma a second five-year term. The result would potentially give Zuma the clout to push through pro-business reforms in the face of union and leftist opposition, DeutscheWelle reports.