Durban, 20 November 2021: Increasing the number of vehicles produced in Africa requires the implementation of policy changes and access to finance, Ebrahim Patel, Minister of Trade and Industry and Competition of South African, has said in Durban, South Africa.
Speaking during a discussion on the automotive sector at the second Intra African-Trade Fair (IATF2021), Mr. Patel said that some policies were a major hindrance in reaching the five million cars per year goal set by Africa.
He argued that the current one million units a year being produced on the continent was punching below the weight for a continent as big as Africa, stating that between 20 and 25 new vehicle assembly plants could be established on the African continent.
He highlighted the importance of a proper logistics system, world class machining and assembly capabilities as crucial elements in order to reach the five-million goal.
Mr Patel noted that most vehicles on the continent were imported second-hand and said that that situation depressed demand. He identified South Africa, Morocco and Egypt as Africa’s leading producers but said that there was a lot of potential in Nigeria, Ghana and several East African countries.
Jelani Aliyu, Director-General of Nigeria’s National Automotive Design and Development agency, said that stopping the import of used vehicles was a challenge, given that the purchasing power of the average African was relatively low, which made used vehicles more enticing. Such cars were, however, detrimental to the development of the automotive industry on the continent.
Herbert Krapa, Deputy Minister of International Trade of Ghana said that his country needed a comprehensive national auto development policy to satisfy original equipment manufacturers. Such a policy was needed to ensure access to a huge vehicle market. Currently, Africa’s policy had 250 checks that had to be adhered to, he noted, saying that if the motor industry in Africa was to sing in one voice, it would be as successful as that of India which currently produced four million cars per annum. He noted that Volkswagen, Toyota, Isuzu, Hyundai and Nissan had all invested in vehicle assembly operations in Ghana.
Andrew Kirby, President and CEO of Toyota South Africa Motors, also described policy as the building block of the automotive industry in Africa but added that a lot of other elements were also required, including the need for the African Continental Free Trade Area (AfCFTA) to work in order to create scale.
He noted that the average local content in vehicles manufactured in South Africa was above 50 per cent and argued that achieving higher local content in the whole of Africa would not be an insurmountable task.
Referring to a recent introduction of the first Corolla Cross Hybrid off the local production line, Mr. Kirby said that a significant focus during the project had been to maximise the local content. “We have localised 621 parts with 56 local suppliers of which 16 are black owned. We onboarded five new tier-one suppliers and 12 new Tier-2/3 suppliers.”
Robert Cisek, Chairman and Managing Director of Volkswagen Group South Africa said that 75 per cent of the company’s manufacturing output was exported to Europe. According to him, it is a problem that the company is not exporting to Africa.
He said that there was tremendous potential in the continent and that if the various stakeholders could agree on issues, such as rules of origin, it would be possible to work with countries that wanted to develop industrial policies and create an auto sector.
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About the Intra-African Trade Fair (IATF2021)
Organised by the African Export-Import Bank (Afreximbank) in collaboration with the African Union (AU) and the African Continental Free Trade Area (AfCFTA) Secretariat, the second Intra-African Trade Fair (IATF 2021) took place in Durban from 15 to 21 November 2021.
IATF2021 provided a platform to promote trade under the AfCFTA. It brought together continental and global buyers and sellers, and enabled stakeholders to share trade, investment and market information as well as trade finance and trade facilitation solutions designed to support intra-African trade and the economic integration of the continent. In addition to establishing business-to-business and business-to-government exchange platforms for business deals and advisory services, IATF2021 also operated IATF2021 Virtual, an interactive online platform that replicates the physical event. IATF2021 also focused on Africa’s creative economy as well as the automotive industry with dedicated programmes. A conference run alongside the exhibition and featured high-profile speakers and panellists addressing topical issues relating to trade, trade finance, payments, trade facilitation, trade-enabling infrastructure, trade standards, industrialisation, regional value chains and investment.
The third edition of IATF will take place in 2023 in Abidjan, Côte d’Ivoire.
For further information about IATF2021 please visit www.intrafricatradefair.com
Media Contacts
Amadou Labba Sall: asall@afreximbank.com
Lennox Mabaso: lennox.mabaso@kznpremier.gov.za