On 17 June 2021, the AAAM and the AfCFTA Secretariat hosted a virtual webinar on the AfCFTA and The Auto Sector which was very well attended.
Herewith is the webinar recording link should you wish to watch:
Access Passcode: UV3HX^5+
On 17 June, the African Association of Automotive Manufacturers (AAAM) and the African Continental Free Trade Area (AfCFTA) Secretariat are hosting a webinar to explore how the AfCFTA is helping to shape the automotive policies for Africa which, in turn, drives industrialisation. Also to be discussed during the free virtual event is why the Rules of Origin are key in driving investment and confidence in Africa.
“We believe that all automotive industry role players, including policy advisors, business leaders and potential investors will gain great insight from the event as we unpack various aspects of the potential of the African market and the opportunities it provides. We applaud the African Union for launching the AfCFTA on 1 January this year; this is the largest free trade bloc in terms of participating countries and will provide the scale that is required for a globally competitive African automotive sector,” says David Coffey, the CEO of AAAM. “The political will is required to put significant policy reforms and trade facilitation measures in place to realise the benefit of the AfCFTA”
The Pan African Auto Pact Vision and how this can fast track the development of the automotive sector in the context of the AfCFTA will be examined during the event. This will include insight into activities taking place on the continent to industrialise and grow the automotive sector and why a Pact can be a short-term reality.
Of particular interest will be a discussion on the fast-tracking of the conclusion of the automotive Rules of Origin. In simplistic terms, the Rules of Origin are a passport that ultimately enables goods to circulate – free of duty – within a free trade area (FTA) such as the AfCFTA, as long as these goods qualify as originating within the FTA. The Rules define the criteria that must be met for a product to be considered as having its origin within the FTA.
In 2019 intra-African trade was a mere 15%, compared to around 47% in America, 61% in Asia and 67% in Europe, but that could change radically now that the AfCFTA is up and running. Once the agreement is fully implemented and the Rules of Origin finalised, the gross domestic product of most African countries could increase by 1% to 3% once all tariffs are eliminated.
“The finalisation of the AfCFTA agreement and the Rules of Origin with respect to automotive are vital to the realisation of the AAAM’s vision of building a successful automotive ecosystem that will lead to a sustainable industry of scale that creates significant jobs, while assisting in the industrialisation of the automotive sector in Africa,” explains Mike Whitfield, who is President of the AAAM and Managing Director of Nissan Africa, and is one of the confirmed speakers for the webinar.
Whitfield and Coffey will be joined by a panel of experts that include His Excellency Wamkele Mene (Secretary-General, AfCFTA Secretariat), Prof. Benedict Oramah (President Afreximbank), Dr. Markus Thill (Vice President of the AAAM and President – Region Africa of Robert Bosch), and Alec Erwin (AAAM policy expert).
The webinar will run from 16h00 to 17h00 (CAT) on Thursday, 17 June 2021. Interested parties are invited to register at https://zoom.us/webinar/register/WN_ieOVeJypQ3erV-dsLrxWqw. Queries can be logged via e-mail to email@example.com. Link details and a password will be supplied on registration.
Cairo/Nairobi/Johannesburg, 8 June 2021: – African Export-Import Bank (Afreximbank) is supporting the African Organisation for Standardisation (ARSO) to harmonise standards in the automotive sector in Africa in order to facilitate an accelerated development of the sector across the continent. The harmonised standards are to be adopted by individual African countries, facilitating cross-border trade, under the African Continental Free Trade Agreement (AfCFTA).
There are 1432 international automotive standards worldwide largely developed by the International Organisation for Standardisation and the American Society for Testing and Materials. To initiate the process of developing African Automotive standards, ARSO prioritised what are referred to as “Whole Vehicle Standards” encompassing motor vehicle components, accessories, and replacement parts.
It is anticipated that some 250 standards will need to be harmonised based on the basic components, accessories and replacement parts which are necessary to keep a vehicle safe and operational. ARSO had initially targeted 18 basic standards based on the demands of the industry to facilitate the development of the automotive sector on the continent. Since inception of the project in 2019, ARSO has, with the support of Afreximbank, been successful in harmonising 42 international standards, well above the targeted 18.
ARSO is planning to launch the completed harmonised African Automotive standards by June 2021 in six countries, namely Rwanda, Ghana, Nigeria, Malawi, South Africa, and Zimbabwe.
An initial grant provided by Afreximbank was critical in highlighting the importance of harmonising standards in the automotive sector and opened the way to other partners to come on board. The Physikalisch-Technische Bundesanstalt in Germany has now agreed to fund the second phase, targeting a further 100 standards with the goal of reaching 250 standards by the end of 2022.
Prof. Benedict Oramah, President of Afreximbank, commented: “In line with Afreximbank’s mandate to drive industrialization and intra-African trade, we are delighted to be supporting the harmonisation of automotive standards on the continent as a crucial step towards the creation and development of a vibrant automotive industry in Africa. Our support has enabled achievement of substantial progress within a short period of time. This is part of Afreximbank’s drive to establish and upgrade standards in various sectors working with diverse partners to support intra-African trade and the structural transformation of African economies under the AfCFTA.”
Afreximbank has adopted a comprehensive automotive strategy under which the Bank is supporting the development of automotive regional value chains, automotive financing, industrial policy and capacity building. The focus on automotive is driven by the Bank’s recognition of its capacity to foster regional value chains and high-quality jobs. The Bank will also organise an automotive show as part of the intra-African Trade Fair, which will give a platform to auto manufacturers, assemblers, Original Equipment Manufacturers (OEMs) and component suppliers to exhibit their products and interact with potential buyers and suppliers.
Dr. Hermogene Nsengimana, ARSO’s Secretary General, said: “Harmonisation of Automotive sector standards is a collective effort of ARSO Members States, private sector players and regulatory agencies. The harmonised standards will pave the way for the elimination of tariff and non-tariff barriers to widen the markets for Africa’s automotive industry under the AfCFTA by creating a reliable network of automotive components and strengthening environmental performance through harmonization of standards for fuels, roadworthiness, transportation of dangerous goods, power driven vehicles and homologation. We commend our partnership with Afreximbank in the harmonization of standards on the continent”.
David Coffey the CEO of the African Association of Automotive Manufacturers (AAAM) said: “ARSO needs to be complimented for the work that they have done in harmonising the 42 automotive standards to date. These are critical in facilitating the development of the automotive industry on the continent.”
“The AAAM vision is to work with strategic partners, such as Afreximbank and ARSO to develop a Pan-African Auto Pact, which conceptualises the establishment of an African Automotive Development Plan, built around a few assembly hubs in the Central, South, East, West, and North of Africa. These hubs are then supported by a spread of value-adding activities in neighboring economies. This will ensure that there is industrial development in all participating countries, and that associated economic benefits are distributed among these countries. Harmonised African Automotive standards are essential for the long-term success of the Auto Pact and we applaud the work that ARSO and Afreximbank are doing to help achieve that.”
The African Association of Automotive Manufacturers (AAAM) recently signed a MOU with Afreximbank paving the way for a collaboration aimed at supporting the emergence of a dynamic African automotive industry. Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing, created through partnerships between Global Original Equipment Manufacturers, suppliers, and local partners.
Upon joining Marthinus Harmse, Managing Director, said “We believe in seamless integration of industrial automation in manufacturing and logistics processes, creating a sustainable, safe, productive, and healthy work environment for everyone. Our joint vision with AAAM is to support the development of the automotive industry across Africa. We remain committed to build strong long-term relationships with our partners and support their operations globally”.
The event focused on the automotive trade sector, with reference to; specific growth opportunities, strategies, and investment required to support economic development across Africa.
Partners to the event included; Afreximbank, Invest Africa and the Intra Africa Trade Fair 2021.
The Intra African Trade Fair 2021 is scheduled to take place from 8 – 14 December in Kigali, Rwanda.
This event will see approximately 1,100 exhibitors, 10,000 visitors – potential buyers, 5,000 delegates, 55 countries and over $40 billion of trade and investment deals. The event will comprise of Exhibitions, Trade and Investment Forums, IATF Virtual, Creative Africa Nexus Program, B2B and B2G exchanges, Country days, IATF automotive show, and youth start up programs.
- There are many unrealized opportunities in the automotive sector, on the African continent.
- The African continent has around 1.3 billion people and only constitutes 1% of global automotive sales.
- 85% of sub-Saharan vehicle sales are second-hand vehicle
- That said in South Africa, 85% of vehicle sales are new cars
AAAM Activities / Progress
- In March 2020, the Ghanaian Government approved the automotive policy
- VW started assembling vehicles in August 2020
- Toyota & Nissan will commence assembly in Qtr3 2021
- A further 3 OEMs have registered with the Ghanaian government as assemblers
- Some component manufacturing has commenced, further development is under way
- There was an exploratory visit in March 2021 which included some international component manufacturers; further visits are planned for 2021
- Awaiting announcement from the Kenyan Government on the adoption of the Auto Policy; expected in Qtr2 2021
- Discussion has commenced on component manufacturing; all parties are optimistic of the opportunities this presents
- AAAM was contracted by GIZ to develop an automotive policy and associated eco-system for the Ethiopian government – scheduled for completion by the end of October 2021
- AAAM and Afreximbank have met with the Minster of Trade and Industry in Egypt and offered to support / fast track the Egyptian automotive program. Preliminary work has commenced and as in Kenya, conversations have been commenced on component manufacturing.
- AFRICAN UNION
- AAAM applauds the AU for launching the African Continent Free Trade Area on 1 January 2021 as this will become the largest free trade block in the world
- The Secretariat has a unique opportunity to shape the continent automotive strategy and policy with the countries that are willing to participate. The Secretariat is committed to driving industrialisation of the African automotive sector.
- The Free Trade area provides the scale of economy required for Africa to become globally competitive.
- AAAM applauds the AU for launching the African Continent Free Trade Area on 1 January 2021 as this will become the largest free trade block in the world
- AAAM PARTNERSHIPS
- VDA – German Automotive Industry Association are fully committed in helping to develop the automotive industry in Africa.
- Afreximbank – are collaborating on key initiatives that will drive the Vision of Industrialisation on the African continent.
- Dhiren Van Mali from Ford Motor Company commented that the sentiment to grow the automotive industry in Africa is incredibly positive. The African market offers opportunity to unlock the scale of manufacturing that is required, associated infrastructure development, finance models and supply chain strategies that are all needed for a stable policy environment.
- Yves Nono from Robert Bosch commended that from a Component supplier / manufacturers perspective, they are aligned with the AAAM’S Vision, which shows huge potential. Nono stated that there are currently 1.3 billion people on the continent – and this could double in the next decade and that mobility is a basic need. The Automotive sector has a significant role to play in this regard.
- Gainmore Zanamwe from Afreximbank explained that the bank was set up by member states and the private sector to facilitate intra & extra African trade. The challenge faced is the low level of intra African trade which is currently only around 16%. Gainmore Zanamwe agreed with fellow panel members that there are many opportunities for African countries to collaborate. Operating under the AfCFTA creates a much bigger market, approximate GDP of $2.5 trillion (ranking of 8 just behind India and ahead of Italy). As such, a viable policy and continental auto strategy is needed.
The African Association of Automotive Manufacturers (AAAM) hosted an exploratory visit by automotive component manufacturers to Ghana in the first week of March. The objective was to introduce potential investors to the Ghanaian automotive market. The initial visit was focused on aftermarket opportunities, which in time will also support OE assembly as the volumes grow, as currently almost all components are imported.
Executives from Maxe (a division of KAP Automotive), Supreme Springs (adivision of Metair) and Hudson Rubber were involved in a week of back to back engagements with OEM assemblers, local manufacturers, vehicle dealers, and spare parts importers as well as the Ghana Standards Authority, the AfCFTA Secretariat and the Ministry of Trade and Industry.
A particularly important aspect of the Ghana Automotive Development Policy is to develop auto component manufacturing with local partners. In a positive meeting with Minister Kyerematen on the last day of the visit, the Minister emphasized the significance of this initiative and the government’s willingness to engage on competitive fiscal incentives for those component manufacturers wanting to invest in Ghana.
“This is the first of many visits planned by the AAAM office in Accra in support of developing the automotive industry in Ghana”, said David Coffey the CEO of AAAM. “It was most encouraging to witness the positive interaction between potential investors, local companies and the willing support offered by the Ghanaian authorities”, concluded Coffey.
The Hon. Alan Kyerematen indicated that the takeoff of the Component Manufacturing industry within the Automotive Sector would provide a strategic guideline for the development of the steel, aluminum, and rubber industry in the country.
The names from left to right are:
– Kezia Kuleape GIADEC
– Karen Asafu-Adjaye GIADEC
– Gino Singh Supreme Spring
– Patrick Nimo MOTI
– Dave Coffey AAAM
– HE Minister Kyerematen MOTI
– Victoria Backhaus-Jerling VDA AAAM
– Clayton Wait Maxe
– Ryan Ramsoonder Maxe
– Eugene Sangmortey VDA AAAM
– Stoney Steenkamp Hudson Rubber
– Alex Kyei MOTI
AAAM and the German Cooperation partner to develop an Ethiopian Automotive Industry Development Policy and a Center of Excellence Pilot Programme
The African Association of Automotive Manufacturers (AAAM) has been appointed by the Special Initiative on Training and Job Creation to develop an Automotive policy for the Ethiopian government that will encourage global Original Equipment Manufacturers (OEMs) and component manufacturers to invest in Ethiopia. In addition, an automotive training programme for existing assemblers and workshop owners will be developed and piloted along with the development of a foundational concept note for the creation of a Centre of Excellence to train local people for the highly skilled jobs that the industry will need.
Cairo, Johannesburg, 18 February 2021: – The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.
Prof. Benedict Oramah, President of Afreximbank and Mike Whitfield, President of AAAM and Managing Director of Nissan Africa, signed the MoU in early February, formalizing the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance, and capacity building initiatives.
Prof. Benedict Oramah, President of Afreximbank said that “the strategic partnership with AAAM will facilitate the implementation of the Bank’s Automotive programme which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA)”.
Under the terms of the MoU, Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers, and local partners. The two organizations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.
To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain. The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, amongst others .
The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional and continental automotive policies, and strategies. With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries. Therefore, the collaboration between Afreximbank and AAAM will be an opportunity to empower the aspirations of African countries towards re-focusing their economies on industrialization and export manufacturing and fostering the emergence of regional value chains.
“The signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa. At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game changer and a hugely positive development,” commented David Coffey, CEO of AAAM.
“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure genuine progress for our industry in Africa,” added Mr. Coffey.
Other areas covered by the MoU include working with the African Union and the African Organization for Standardization to harmonize automotive standards across the continent and developing an automotive focused training program for both the public and private sector.
AAAM ‘s objective of industrialising the automotive sector across the continent of Africa has received another boost of support with the announcement of Afreximbank’s Automotive Programme which focusses on three pillars, namely, the development of Regional Automotive Value Chains, Automotive financing and Policy and Capacity Building.
Afreximbank, headquartered in Cairo was established in 1993, for the purpose of financing, promoting and expanding intra-African and extra-African trade. AAAM will actively support Afreximbank in the development of these three pillars. The attached brochure gives an insight into Afreximbank’s Automotive Programme.
The Africa Continental Free Trade Agreement (AfCFTA) which was finalised at the virtual African Union Summit in December, is an important milestone for the realization of the AAAM’s vision of building a successful automotive ecosystem which will lead to a sustainable industry that creates significant jobs and assists in the industrialization of the auto sector for Africa.
AAAM applauds the African Union for pioneering and launching the African Continental Free Trade Area on 1 January 2021; this will ultimately become the world’s largest free trade bloc covering a market of initially more than 1,3 billion people and up to $3 trillion dollars in GDP with the potential of increasing the intra Africa trade by over 50%. The establishment of the AfCFTA is necessary and opportune considering the unprecedented population growth, the high proportion of youth and the growing middle class.
“The Secretariat of the AfCFTA has the unique opportunity of shaping a continental automotive policy with countries that are willing to participate in the industrialisation of the auto sector. The AAAM is fully committed to supporting the Secretariat in realizing the vision, of creating demand and production for 5m new vehicles per annum from the 2019 level of 1.1m. This growth requires the implementation of progressive automotive policies and eco systems across the continent, where hub countries in regions will assemble vehicles supported by surrounding economies sharing in the value chain; ultimately regional markets will trade vehicles and components. Country and regional partnerships are not new to the development of the auto industry around the world” said David Coffey CEO of AAAM.
“It is anticipated that the Rules of Origin for the automotive industry will be concluded by mid-2021 thus paving the way for real industrialisation of the sector across the continent. Effective industrialisation is fundamental to the journey of becoming competitive and to the subsequent liberalization of tariffs across Africa – the AfCFTA will provide the scale that is required for industrial competitiveness” concluded Coffey.