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.
AAAM, the only African body focusing on the expansion and deepening of the automotive industry across the continent, would like to thank all their stakeholders for their support and contribution in 2020 despite the challenges of the COVID Pandemic.
Some good progress was made on several fronts including the recruitment of several new members from across Africa. However, the most notable being the implementation of Ghana’s Automotive Development Policy which saw Volkswagen commencing its assembly operation, with both Toyota and Nissan committing to do the same with more announcements to follow in early 2021. First steps were also taken to develop a component supplier industry which will be followed up with a visit to Ghana by a delegation of first tier suppliers in early 2021.
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The German automotive industry sees potential in Africa and strengthens its ties to the continent. The German Association of the Automotive Industry (VDA) joined hands with the African Association of Automotive Manufacturers (AAAM) as part of the “PartnerAfrica” project of the German Federal Ministry for Economic Cooperation and Development (BMZ). AAAM is the first Automotive association with a pan-African approach, established in 2015 by global Original Equipment Manufacturers (OEMs).
The partnership-based cooperation between VDA and AAAM is mutually beneficial: in cooperation with local and regional structures it helps the automotive industry to improve access to sometimes difficult markets and at the same time it is in the interest of German development policy to improve local prospects by involving the private sector and to create sustainable jobs and sustainable mobility in partner countries
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The African Association of Automotive Manufacturers (AAAM) participated in the ‘Developing the automotive industry in Africa – opportunities for industrialisation, job creation and green growth’ webinar organised by the Trade Directorate of the European Commission with support from AETS.
The webinar shed light on the development path of the automotive sector in Africa, and explored the potential and challenges for developing EU-African and intra-African automotive value chains, as well as the role of EU trade and investment policy and the African Continental Free Trade Area (AfCFTA).
• Mr. Dave Coffey, CEO, AAAM
• Dr. Markus Thill, President Africa Region, Bosch and Vice-President, AAAM
• Mr. Marius Ochel, Head of Cluster International Association Partnerships Africa & India, German Association of the Automotive Industry (VDA)
• Mrs. Victoria Backhaus-Jerling, Project Manager, leads engagements between the VDA and the AAAM
• Mr. Serge Kamuhinda, CEO Volkswagen Rwanda
• Dr. Francis Mangeni, Head of Trade Promotion and Programs, AfCFTA Secretariat
• Dr. Martyn Davies, Managing Director Emerging Markets and Africa, Deloitte (Moderator)
Click here to download the ‘Are we heading towards vehicles made in Africa at scale?’ presentation by Mr Dave Coffey, Mr Marius Ochel and Mrs Victoria Backhaus-Jerling.
Click here to download the ‘The Pan African Auto Pact Vision for Africa – A supplier’s view’ presentation by Dr Markus Thill.
Speaking at the recent announcement by Nissan to commence vehicle production in Ghana, David Coffey the CEO of the African Association of Automotive Manufacturers (AAAM) commended the Ghanaian government for implementing their progressive automotive policy, which makes it attractive for automotive manufacturers to invest in local auto assembly, which will progress as demand grows to complex manufacturing with locally sourced components to support full CKD. Nissan’s announcement follows Volkswagen and Toyota with Volkswagen already assembling vehicles in Ghana.
Whilst in Ghana, Coffey met potential component manufacturers that were identified with capability in the fields of metal forming, rubber and plastic forming as well as CNC machining. “The objective of this work was to potentially partner these non- automotive manufacturers with current OEM component manufacturers in order to develop their capability to manufacture products, initially for supply to the aftermarket, and then to the assemblers as the volumes grow. With the appointment of Eugene Sangmortey as the AAAM VDA project Manager based in Accra, the drive to develop component manufacturing in Ghana will gain traction” said Coffey.
Hosted by The African Association of Automotive Manufacturers (AAAM)
Powered by Deloitte Africa. Supported by Afreximbank, JETRO, VDA and Afrika-Verein der deutschen Wirtschaft
The Africa Automotive Forum convened expert stakeholders from the automotive industry to unpack opportunities to unlock the potential of the automotive industry in Africa. The programme consisted of three Auto Agenda Councils and virtual conferences characterised by an important exchange of ideas through interactive and impactful engagement. The themes of the engagements were: ‘Enabling policy by government’, ‘Regional value chains’ and ‘Driving affordability and mobility solutions’.
The African Association of Automotive Manufacturers (AAAM) in partnership with the German Association of the Automotive Industry (VDA) is pleased to advise the appointment of two Project Managers that will support the implementation of the “Partner Africa project” between VDA and AAAM to industrialise and grow the automotive sector in Africa. These appointments have been facilitated through the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ).
Victoria Backhaus-Jerling will be based at the NAACAM (National Association of Automotive Component and Allied Manufacturers) offices in Johannesburg and will lead the engagements between the AAAM and the VDA. Victoria’s recent employment in the German government, along with her knowledge of the German automotive industry and her fluency in both English and German equip her well to coordinate and drive automotive development projects in Africa.
Eugene Sangmortey will be based at the offices of the Delegation of German Industry and Commerce in Ghana (AHK Ghana). Eugene’s engineering background and experience in vehicle dealerships and the after-sales environment position him well to develop the automotive ecosystem in Ghana and the Economic Community of West African States (ECOWAS) region.
The Association of African Automotive Manufacturers (AAAM) has been working with the Nigerian Federal Ministry of Industry Trade and Investment through the NADDC on the development of a fully-fledged motor manufacturing industry, enabled by a comprehensive automotive framework which would assist in the industrialisation of Nigeria. This would be scuppered by the 2020 Finance Bill which sees the Customs Service proposing to reduce levies on motor vehicles for the transportation of persons from 35% to 5% and the reduction of duties for the transportation of goods from 35% to 10%.
A critical element of an automotive policy that will drive industrialisation is to sufficiently differentiate tariffs for locally assembled vehicles from tariffs for imported vehicles; should an acceptable level of differentiation not be in place the industrialisation and growth of the automotive sector will not transpire.
“The proposed automotive policy framework requires that the levies/duties be retained at their existing levels with some refinements. The proposed reduction in levies/duties will thus remove any possibility for Nigeria to industrialise and develop the automotive sector” said David Coffey the CEO of AAAM.