SA’s Automotive sector eyes Africa for growth

South Africa’s automotive sector is turning its eyes north in a bid to create new opportunities and establish new markets to produce and trade its goods and services.

Automotive manufacturing stakeholders, including SA based vehicle assemblers, financial institutions and component manufacturers represented by the National Association of Automotive Component and Allied Manufacturers (NAACAM), were in Ethiopia to gain insight into creating business opportunities and a favourable investment environment for South African companies.

The roadshow is an initiative of the African Association of Automotive Manufacturers (AAAM), facilitated by Deloitte Africa. It is also intended to assist Ethiopia, Africa’s fastest-growing economy, in shaping policy to support industry and in particular the automotive sector; gain insight into the automotive sector and potential for enhanced manufacturing in Ethiopia, and build relationships and networks between South Africa’s automotive stakeholders and key Ethiopian government and industry figures.

The three-day roadshow – saw delegates meet Ethiopian President Sahle-Work Zewde, State Minister of Finance Eyob Tekalign Tolina, Ethiopian Investment Commissioner Abebe Abebayehu, as well as a host of private and public sector representatives.

Ethiopia is Africa’s fastest-growing economy with the economy expected to grow by nine per cent this year. An increase in industrial activity, including investments in infrastructure and manufacturing, are behind Ethiopia’s rise.

Reflecting on a productive trip, Renai Moothilal, Executive Director of NAACAM, says, “NAACAM is a member of the Association for African Automotive Manufacturers and through this platform, we hope to create positive conditions for our members to trade and invest in the wider continent.”

Adds Moothilal: “The reality is that in order to unlock markets across the continent, cross border industrial development is vital. Governments in partner countries such as Ethiopia need to put in place supportive policies that grow automotive manufacturing capabilities there. Dealing with policy issues around grey and used vehicle imports, standards and homologation, protection of IP, liquidity of currency exchange and financing of investment are key when looking to promote automotive manufacturing.”

Thomas Schaefer, president of AAAM and Managing Director of VWSA, says the roadshow had been organised because “the future of the South African automotive industry is symbiotically linked to the future opportunities and growth of Africa”.

He says the initiative is part of AAAM’s long-term vision to establish a pan-African automotive industry collaboration with countries who have the political will to develop industries, and at this stage will likely include South Africa, Nigeria, Ghana, Kenya, Rwanda and Ethiopia.

“All South Africa’s automotive stakeholders focus on exporting to the US or Europe, but the rest of the developed world wants to export there as well, and they are well ahead of the game with high efficiency and plants closer to those markets. The only advantage that Africa has is low labour costs in some countries, but South Africa hasn’t even got that. So, the only way to promote growth is to connect Africa’s economies for mutual trade and everybody gets a piece of the pie,” he points out.

Schaefer says expanding into Africa will result in South Africa’s automotive players not just having a market of 57-million people, but over one billion people.

He believes it will be “a long road” if every African country tried to go it alone and develop a massive automotive industry only for themselves.