Deloitte, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services, has partnered the African Association of Automotive Manufacturers, to host the first Africa Automotive Forum via a virtual platform.
This forms part of a long-term goal to unearth the potential of Africa in the automotive industry to become a powerhouse.
According to the schedule, Day One of the forum, which is on Wednesday, 2nd September 2020, from 2:00 pm–3:30 pm, will tackle the theme: ‘Enabling policy by government’.
On Wednesday, 16th September 2020, Day Two of the forum, from 2:00 pm – 3:30 pm, will address the theme, ‘Regional value chains’, whereas the final discussion on Wednesday, 30th September 2020, at 2:00 pm – 3:30 pm, will conclude on the theme’ ‘Driving affordability and mobility solutions’.
It is the view of the organizers that there are opportunities in Africa’s young and growing population with rapid urbanization; hence the need to unlock its potential in the automotive industry, owing to a growing vehicle demand, to become a true industry competitor.
The forum will among other things answer questions on how to unearth the continent’s potential in the industry; and how the regional blocs can unite to write the legislation that could see hundreds of thousands of jobs created through the industry.
The 3-day virtual conference series, hosted by the African Association of Automotive Manufacturers (AAAM) will be presented by Deloitte.
Expert stakeholders from across the world will be providing their insight at panel discussions through dialogue and debate that seek to unpack how Africa can jump-start its automotive industry.
Keynote address
Ghana’s Minister of Trade and Industry, Alan Kyerematen, is billed to deliver the keynote address, while Mike Whitfield, AAAM President and Chairman of Nissan Group of Africa and Managing Director of Nissan Egypt, will lead a discussion on enabling government policy with automotive industry practitioners.
The automotive industry practitioners include Masa Sugano, Deputy Executive Director, Africa Region of Japan External Trade Organization (JETRO), Mike Mabasa, Chief Executive Officer of National Association of Automobile Manufacturers of South Africa (NAAMSA), and Anthony Black, Professor in the School of Economics at the University of Cape Town.
Among other speakers, AAAM members including Renai Moothilal, Executive Director of National Association of Automotive Component and Allied Manufacturers (NAACAM), and Dr. Markus Thill, President, Region Africa of BOSCH Group, together with Thomas Schaefer, former AAAM President and Chief Executive Officer of ŠKODA Auto a.s, will discuss unlocking the economic benefits of regional value chains.
AAAM members, including, Simphiwe Nghona, Group Head for Vehicle and Asset Finance (VAF) of Standard Bank, Yves Nono, Vice President – Mobility Solutions Sales of BOSCH, Gerhard Botha, General Manager of Toyota South Africa Motors, together with Ridwan Olalere, Country Director for Uber, Nigeria, will discuss driving affordability and mobility solutions in Africa.
Serge Kamuhinda, Director at Volkswagen Rwanda, will share a case study on the Volkswagen Business Case in Rwanda.
“The opportunities for growth are there, but there are still challenges across Africa. This conference is about unpacking those issues, finding solutions, and lighting the way to ensure our shared vision for the continent is achieved,” said Dr. Martyn Davies, Managing Director of Emerging Markets and Africa at Deloitte, the facilitator for the sessions.
The Dialogue throughout the conference will be split between three major themes:
Regional Value Chains
The plethora of fragmented, small automotive production facilities rather than a singular force across the continent appears to be the result of ineffective automotive policies, with only Morocco and South Africa standing out as having fully-fledged industries.
“However, even these two countries are heavily reliant on the export of high-volume models to non-African markets, though the long-term sustainability of this is questionable,” said Dave Coffey, CEO of AAAM. One of the solutions to this is the development of a pan-African automotive sector with the establishment of assembly nodes/hubs in the South, West, East and North of Africa, and a spread of value-adding activity (e.g. component manufacture) to neighbouring economies based on their resources or comparative industrial advantages. Partnerships between countries have been key to the development of auto industries across the world; as this facilitates scale which is necessary for this globally competitive industry.
“Not every African country is able to grow and industrialize a fully-fledged automotive industry sector. So, beyond these hubs, we need to build a hub and spoke model, where a hub such as Kenya, for example, can be supported by a supply spoke in a neighbouring country,” said Davies.
Enabling policy through government
A lack of a political will can be the death knell for any industry, which is why Coffey believes that it’s time for the automotive sector across the continent to push for legislative change, much like what has recently been seen in Ghana. The Ghana Automotive Development Policy, through its Ministry of Trade and Industry, has already laid the way for the country to become a fully integrated and competitive industrial hub in West Africa. However, other countries are failing to realize the potential benefits, and are focusing more on the imported, used vehicle industry.
“The political will to support the significant medium-term economic and good job creation benefits of the effective auto industry is often overshadowed by the short-term gains of customs revenue for imported used vehicles – when duty is actually paid,” said Coffey. To create a cross-continental industry, getting governments on board to support legislation that elicits investor confidence is paramount. The pending African Continental Free Trade Agreement could hold much promise for deeper value chain creation for the automotive value chain creation going forward,” said Davies.
Driving Affordability
Creating vehicle demand is about affordability because, for many African consumers, the high cost of new vehicles is the main obstacle to ownership. Poor infrastructure and high logistics costs do not support a competitive value chain, but this can be changed with enough political will.
“This could include effective policies for financial institutions that support affordable asset-based vehicle financing and alternate mobility solutions that stimulate demand,” said Coffey.
“Prices are also inflated by bad infrastructure and taxation, so the first step is to reduce this dramatically – as we’ve seen in Ghana. The importation of pre-owned, dumped and roadworthy vehicles need to be controlled through legislation that protects the consumer and the local economy,” said Davies.
Interest rates on new vehicles also remain an obstacle for prospective buyers.
“In Africa, you generally have interest rates above 20%, and that’s not affordable. It is important that we explore solutions with governments. The question is; how can we work with financial institutions and the value chain to offer interest rates of 10% or less? That is fundamental to driving affordability,” said Coffey.
“We hope that the African Automotive Forum can be a platform that allows us to find solutions to these burning questions, by bringing together some of the industry’s greatest minds and using their lessons and applying it to the African context. This conference, in partnership with AAAM, is yet another strategic initiative to promote the automotive industry and automotive industrialization in Africa” he concluded.
What is the AAAM?
The AAAM was established in November 2015. It is the only African body focusing on the expansion and deepening of the automotive industry across the continent, by working with governments to shape and implement policies that will attract investors, unlock the economic potential of the continent, and align a global network of stakeholders committed to the development of the automotive industry in Africa.
