Auto manufacturers rally Nigeria, others to take advantage of AfCFTA

President, Association of African Automotive Manufacturers (AAAM), Mike Whitfield, has urged Nigeria and other African nations to put in place, Automotive Industrial Development Plan as part of measures to unlock the economic benefits of the African Continental Free Trade Agreement (AfCFTA).

Whitfield, who is also the Managing Director, Nissan’s Africa regional business unit, explained that fewer vehicles are presently owned in Africa than anywhere else in the world and the industry is heavily dependent on government’s patronage.

Whitfield, in a statement, said while Africa accounts for only 1.3 per cent of the world’s vehicles, the continent comprises 17 per cent of the globe’s people with a motorisation rate of 42 per 1,000 individuals, compared to the global average of 182.

He said: “The biggest problem is that 80 per cent of the African vehicle fleet is second hand, imported from the UK, the U.S. and Japan.

“Frankly, the vehicles that are brought into the continent are not made for either our road severity or the quality of fuel that is available. As a result, the people who sell them have to alter the engines by disabling the sensors and removing the catalytic converters, creating vehicles that become the worst polluters on the road.

“There are no warranties, nor spares, so there is no way of maintaining the integrity of the safety features that the vehicles were originally equipped with. There are no spare parts, so plans have to be made to use alternatives, further compromising the efficiency and capability of the vehicle.

“They are cheap in the short-term, but incredibly expensive in the long-run, as it is almost impossible to get spare parts. And because there’s no warranty, it is almost impossible to get the short-term asset financing that is common elsewhere in the world to buy new vehicles.

“That explains why, for the indigenous auto assemblers, it is incredibly difficult to create a viable automotive market outside of government and corporate purchase, simply because it is cheaper to import second-hand cars.”

As a way out, Whitfield urged Nigeria and other concerned African nations to, without delay, put in place automotive industrial development policies and programmes.

Recall that the Director-General of the National Automotive Design and Development Council (NADDC), Jelani Aliyu, at a recent training workshop for automotive journalists in Lagos, assured that Nigeria’s own version of the Auto Industry Development Plan was almost ready and would be passed into law before the end of 2021.

The Nissan boss stressed that the said policy, when put in place, would create incentives for OEMS and automotive manufacturers, to set up assembly plants in those countries, transferring skills, industrialising and diversifying their economies.

He explained: “Developing auto policies to create indigenous automotive industries, further underpinned by auto pact to ensure that economic trade regions within Africa, allows for sustainable intra-continental trade. It will also create a very real continental powerhouse empowered to export vehicles to the international market, as South Africa’s automotive industry is currently doing.

“Another compelling reason for Africa to start building its own vehicles and trading within its regions is that, in less than 30 years’ time, the vehicles that Africa has been accustomed to, absorbing from the rest of the world for so long, will be electric.

“The dilemma is that Africa will not be ready. What we should be doing is working towards this, helping to industrialise our continent, preparing for that transition by developing an automotive sector that creates real mobility solutions for a continent with the youngest population and a growing middle class that is rapidly urbanising.

“That same automotive industry will also have to keep abreast of international developments, policies and trends so that the vehicles we produce here will be as desirable to foreign markets as they are local.”

Already, stakeholders in Nigeria within the automotive sector have stressed the need for the government to encourage the conversion of fuel vehicles to gas powered ones, stating the electric vehicle is the new shift in the industry.

The AAAM president identified some economic benefits of a virile national automotive industry as important to balancing trade and foreign exchange earnings from exporting locally made vehicles, as against spending needed foreign funds to import them.

He noted that Africa, at the moment, has only two major automotive manufacturing hubs, South Africa and Morocco, with Egypt trailing in the third position.

In comparison with Nigeria, he cited South Africa as a very inspiring example of what a sustainable automotive sector can do in partnership with government and organised labour.

“60 years in the making,” he said, “today the South African automotive sector directly employs 470,000 people and three times more in the value chain. It contributed 7.1 per cent to the GDP in 2019 and earned $ 14, 3-billion through exports.

“South Africa produced 631,921 vehicles in 2019. That same year, 536,612 new vehicles were sold in the country. In Nigeria, by contrast, only 10,000 new vehicles were sold. Bear in mind, these two countries are Africa’s biggest economies; between South Africa, Morocco (394 652) and Egypt (94 000). Africa produced 1.1-million vehicles in 2019.

“But if Nigeria and other concerned Africans key into the recommended Automobile Industry Development Plans, the AAAM believes that African automobile market could rise to 5-million a year.

“The key to that is creating automotive hubs in Africa, which at the moment would be centred in Kenya, Egypt, Ethiopia, Nigeria, Tanzania,” he said.