Despite disappointing progress in some key countries, it needs only one success story to get plans for a pan-African motor industry back on track, says Victoria Backhaus-Jerling, CEO of the African Association of Automotive Manufacturers (AAAM).
Governments in Ghana and Kenya, two intended vehicle manufacturing hubs in the plan, have taken longer than expected to approve necessary automotive legislation. Other countries, such as Egypt and Algeria, are forging ahead.
Backhaus-Jerling says the performance of Ivory Coast is particularly pleasing.
The West African country, which hopes to become a production base for commercial vehicles, “has approved regulations and policy guidelines” and is keen to get going.
She hopes its go-ahead attitude will encourage other countries to follow suit.
Backhaus-Jerling, a German, became CEO on March 1, succeeding South African Dave Coffey, who had been at the helm since February 2020.
She moved to Southern Africa later that year to run the local project office of the German Association of the Automotive Industry, which supports AAAM.
Africa needs its own motor industry if it is to develop its new-vehicle market. Annual sales across the continent are about 1.1-million, of which more than 50% are in SA.
Millions more vehicles are sold but they are pre-owned — the overwhelming majority dumped in Africa from developed countries.
AAAM believes that development of a pan-African motor industry, comprising interlinked regional groupings, can provide the scale to build affordable new vehicles, bring industrialisation to new countries and create hundreds of thousands of jobs.
The association believes such an industry could almost treble the current new-vehicle market to 3-million by 2035. Some planners think it could go as high as 5-million.
Coffey, however, says market modelling, taking into account updated economic prospects for the continent’s 54 countries, could change those forecasts — possibly downward.
On the plus side is Africa’s developing free-trade agreement, which is intended to come fully into force in 2030.
Coffey, who remains an AAAM consultant, says some political issues continue to slow progress towards a continental motor industry. One of these issues is rules of origin — verifiable criteria to determine which country or countries a product comes from and therefore whether it qualifies for duty-free, cross-border movement.
This is particularly important in the AAAM model, which visualises four countries — SA, Ghana, Kenya and Egypt — acting as manufacturing hubs in their regions, with neighbouring countries free to build vehicles but also supplying raw materials, minerals, components and technology.
Coffey says most countries have agreed on rules-of-origin definitions but a handful are holding out for something more favourable.
Backhaus-Jerling says there is no doubt about overwhelming support across Africa for a motor industry.
SA, where vehicles have been manufactured since 1924, has been the dominant force since then. However last year, for the first time, it was overtaken by Morocco as Africa’s leading vehicle producer.
But Morocco manufactures almost exclusively for European customers and has shown little interest in African markets. Coffey says: “They are very north-facing. They haven’t needed to look south because they already have a good thing going.”
Other countries are more collaborative, says Backhaus-Jerling. Tunisia and Algeria are developing automotive policies. Egypt has one in place and recently issued its first incentive certificates. Ivory Coast is champing at the bit and several other countries, such as Rwanda, are anxious to join in.
Ghana and Kenya, where several multinational motor companies have invested in vehicle assembly, have been slow in passing legislation enabling them to be part of the continental industry but are confidently expected to do so soon.
Even Nigeria, Africa’s most populous country and once the favoured manufacturing hub for West Africa, may finally get its act together — though its history of not delivering on automotive policy promises is likely to deter mass foreign investment.
Backhaus-Jerling, with some understatement, says: “Regional dynamics across Africa are interesting.”
Competition
Coffey discovered that when he became CEO. He admits that some countries were mistrustful of a South African leading a pan-African project. They feared it was another SA attempt to bully the continent for its own benefit. “I think it may be helpful not to have a South African in charge for a few years,” he says.
Ironically, says Backhaus-Jerling, some SA companies, particularly components producers, were also wary of the process, fearing that they would lose business to competitors in other countries.
Quite the reverse, she says. The bigger the African industry, the more there is for everyone.
Africa remains predominantly the territory of vehicles powered by petrol and diesel internal combustion engines (ICEs).
“There’s a lot of road left for ICE in Africa,” he says.
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