AAAM to unlock Africa’s economic potential – CEO

The African Association of Automotive Manufacturers (AAAM) aims to expand and deepen the automotive industry across Africa by working with African governments. This will be achieved by the development, refinement and implementation of auto policies and ecosystems that will attract investors and unlock Africa’s economic potential.

Common CEO david coffee Says that the consortium is actively working with key stakeholders in various African countries; Hub assemblers initially include Ghana, Ivory Coast, Nigeria, Egypt, Ethiopia and Kenya.

Morocco and South Africa are currently the only two countries in Africa that have significant automotive manufacturing industries, with Morocco expected to produce 403 007 vehicles in 2021 and South Africa to produce 499 087 vehicles in the same year, he says.

Apart from Egypt, which produced more than 100,000 vehicles in 2021, the rest of the continent has fragmented, semi-knocked down production facilities in small quantities in various countries, notes Coffey.

Africa also has a low motorcycling rate of 42/1 000 inhabitants, while the global average is 182/1 000 inhabitants. Coffey notes, in addition to unregulated imports of three to five million used vehicles annually, there is a lack of harmonized standards and homogeneity.

He says that poor infrastructure, high logistics costs, affordability challenges and a lack of component manufacturers are also preventing the automotive industry from contributing to Africa’s industrialisation.

industrial policy

AAAM, together with the African Continental Free Trade Area (AfCFTA) Secretariat, the African Union, Afriximbank, the United Nations Economic Commission for Africa and the African Organization for Standardization, has developed a draft continental automotive strategy and implementation plan, which is currently under review. Is. by AfCFTA member states.

In addition, AAAM signed a memorandum of understanding with four European private sector associations and eight African associations in February last year to cooperate on the development of the automotive industry across Africa.

Coffey noted that the continental strategy promotes countries to align and complement each other with neighboring countries to facilitate inclusivity and automotive industry growth.

The first component needed is the political will to legislate and implement a progressive automotive policy, including taking advantage of the benefits of the AfCFTA’s developed and important single market.

The second component focuses on the development of regional value chains and the transformation of raw materials.

It aims to develop a strong component manufacturing base and build contacts and partnerships in and outside Africa, resulting in viable, sustainable production and trade.

“Around 60% of spare parts sold in Africa are used, and the remaining 40% are new, half of them being counterfeit parts. In the interest of safety and reliability there is a need to introduce standards to regulate spare parts There is such a huge opportunity to build from.

Coffey says it is also important to assess the natural resources a country has, as the transformation of these resources, including minerals, into an African country’s automotive value chain can be a significant contribution.

The final component addresses demand creation and intensive industrialization. While Africa accounts for 17.2% of the global population, vehicle demand in the continent accounts for only 1.3% of global demand.

Coffey says that many people cannot afford a new vehicle; Thus, implementing an efficient and safe used car ecosystem with affordable and innovative mobility solutions will drive automotive demand.

He says automotive policies also need to address access to affordable finance options in Africa.

“The architecture of national auto policies, while independent, is ideally compatible and designed to suit an ecosystem that supports continental production and trade while driving manufacturing competitiveness.”

Coffey says that the implementation of the continental automotive strategy through the necessary policies will increase demand for new vehicles in Africa from 1.1 million units per year currently to 5 million units per year by 2035.

policy development

Ghana will implement the balance of its policy provisions this year after announcing its motor vehicle program in 2020, notes Coffey.

This includes taking the major step of banning the import of vehicles older than ten years.

“Apart from supporting the industrialization of the region it will help reduce the risk of accidents on the road and enable customers to [to use] road vehicles.

Egypt announced its motor vehicle policy in June last year with final parliamentary approval due on October 27, 2022. The country has constituted an Automotive Supreme Council to oversee the implementation of the policy and the achievement of objectives.

The Kenyan National Assembly approved the Kenya National Motor Vehicles Policy on May 25, 2022 and a Motor Vehicles Council will be formed this year to implement the policy.

In Côte d’Ivoire, AAAM policy experts were appointed by the government to research and develop the automotive policy, which was completed in December 2022.

KPMG was appointed by the Nigerian government to conduct an independent automotive policy review of the country; It was completed in 2022.

There is also a substantial demand for the mineral in the automotive industry. Electric vehicles require cobalt, manganese, lithium and nickel – all of which are in Africa; 70% of these minerals are being exported unprocessed to China.

Coffey concluded, “It’s a huge loss on localization – we have the potential – now we need the policies.”