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CEO of the African Association of Automotive Manufacturers (AAAM), Dave Coffey, speaks on his association and its vision for the automotive industry in Africa. He says South Africa and Morocco are great examples of countries where significant auto investment continues to take place year after year whilst providing skilled employment at scale because of the political willingness to legislate and implement a stable and progressive automotive policy, which is the key to unlocking the economic opportunities. Excerpts.
By OLAOLU OLUSINA
What are the objectives of AAAM?
The African Association of Automotive Manufacturers (AAAM) was founded in November 2015 by global OEMs. AAAM is an automotive association focused on the continent of Africa with the vision to expand and deepen the automotive industry by working with African governments to shape and implement policies and ecosystems that will attract investors and unlock the economic potential of the continent. The members of AAAM are global OEMs, assemblers, component manufacturers and service providers that contribute to the development of automotive ecosystems. With the effective implementation of the agreed continental automotive strategy and progressive national auto policies and ecosystems, AAAM believes that new vehicle demand could increase from 1.1m to at least 3.3m per year and possibly 5m by 2035.
Tell us about AAAM’s vision for Africa which aims at deepening the continent’s auto industry and influencing policies.
Let me articulate the automotive vision for Africa.
A Continental Automotive Strategy and Implementation Plan that was developed by the African Association of Automotive Manufacturers (AAAM), AfCFTA Secretariat, Africa Union (AU), UNECA, Afreximbank and ARSO was adopted as a living document by the AfCFTA Council of Ministers at a meeting in Botswana in February 2023. An AfCFTA Automotive Task Force has been formed to oversee, guide and implement this Strategy under the supervision of the Council of Ministers. Private sector/manufacturers’ representatives of State Parties can voluntarily participate in the Task Force with the immediate priority of the Task Force to resolve the Rules of Origin.
The architecture of the Continental Auto Strategy is built on a few important principles:
• Hub countries will assemble vehicles with neighboring economies sharing in the value chain; OEMs will not build a model in a Completely Knock Down (CKD) format in more than one country in Africa. The effective implementation of the continental automotive strategy will cause OEMs to decide where they manufacture what vehicles in Africa based on a country’s competitive and sustainable advantage and as part of their global manufacturing footprint.
• The component manufacturers follow the OEM investments, benefitting from the scale whilst investing in the technology requirements of the OEM and benefitting from the demand for spare parts manufactured off the same equipment.
• The development of Regional Value Chains including the transformation of raw materials will facilitate inclusivity and support for the continental auto strategy.
• Countries are to implement independent but compatible national policies.
• The architecture of these national policies will support continental production and trade (scale) whilst driving manufacturing competitiveness.
• It is important for regional alignment in terms of complementarity, in order to facilitate scale. For example, we are currently exploring a bilateral between Ghana and Cote d’Ivoire where Ghana assembles light vehicles and Cote d’Ivoire assembles bus, truck and trailers. Such a bilateral would bring about automotive free trade in accelerated time frames, as opposed to a 5 year or longer tariff phase down once the rules of origin are agreed.
• As assembly capacity grows the importation of used vehicles will transition from an unregulated environment of imports to used vehicles coming from vehicles assembled in Africa. In the short term we are driving a strong initiative to ensure vehicles exported to Africa are roadworthy.
• Scale will be enhanced by:
The harmonisation of minimum standards for new and used vehicles, spare parts and fuel.
Providing affordable mobility solutions and access to affordable investment and vehicle asset finance.
Governments are to source locally assembled vehicles.
How successful was your last mission to Nigeria?
AAAM’s purpose was to meet the automotive assemblers and to share the auto vision for Africa, our activities and progress on the continent. Nigeria has a key hub assembler role to play in Africa; it is important that the Nigerian private sector is aware of and in support of the continental strategy and gets on the AfCFTA auto stage. The strategy was well received. I want to note my appreciation for Luqman Mamudu who facilitated this meeting. We are linking auto private sector associations across Africa to promote collaboration – strong and aligned private sector associations are critical to realising the auto vision for Africa.
What is AAAM doing about transiting from SKD to CKD to ensure local content development?
The continental automotive strategy drives scale which enables the transition to CKD and deep value addition.
Is AAAM well-positioned to make auto financing work across sub-Saharan Africa?
AAAM is supporting the government of Ghana to develop an appropriate vehicle finance framework that will unlock demand – in addition AAAM has a vehicle financing working group that is exploring financing activities in Ghana with expert service providers from successful ecosystems. All these learnings will be important for sharing across Africa. In addition, Afreximbank has committed $1bn over 5 years to developing the full automotive value chain including vehicle and investment finance.
What is the progress on the efforts at getting the Auto Policy Bill signed into Law by Nigeria’s President, Bola Tinubu?
For the first time in a number of years, I am optimistic that the current Bill will be passed into law and implemented.
AAAM and OEMs seem to have been focused on Ghana in the past six years or so. Why is it so?
Ghana adopted and implemented a progressive policy – long term certainty for investors is critical.
What are the prospects for Nigeria ?
OEMs remain very interested in Nigeria – we need certainty of policy that has been passed into law and effectively implemented; this includes the required vehicle, fuel and parts standards to support investments.
What is responsible for the growth of the automotive industry in North Africa and what can West Africa do to catch up?
Regulation of used vehicles in North Africa is well advanced.
What are the challenges facing the auto manufacturers in Africa?
The political willingness to legislate and implement a stable and progressive automotive policy is the key to unlocking the economic opportunity – South Africa and Morocco are great examples where significant auto investment continues to take place year after year whilst providing skilled employment at large scale.
Who is Dave Coffey?
Dave Coffey has spent most of his working career in the automotive industry. He graduated from the University of Natal in South Africa with a degree in B.Sc. Mechanical Engineering in 1984 and subsequently obtained an MBA from the University of Cape Town in 1992. He is currently the CEO of the African Association of Automotive Manufacturers (AAAM). He previously held senior positions within various automotive supplier companies including Dorbyl Automotive Technologies and Bel-Essex Engineering.
Before taking up his position at AAAM, he was the Managing Director of Shatterprufe, a manufacturer and distributor of automotive glass in South Africa. Dave has also been active in various business organisations during his career, including being President of the National Association of Automotive Component and Allied Manufacturers (NAACAM) twice, as well as being President of the Nelson Mandela Bay Chamber of Commerce.
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