The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have signed a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.
A joint statement issued by both organisations on Thursday in Cairo, Egypt, said Prof. Benedict Oramah, President of Afreximbank and Mike Whitfield, President, AAAM and Managing Director, Nissan Africa, signed the MoU in early February.
The statement said that the signing formalised the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance and capacity building initiatives.
Oramah was quoted in the statement as saying “the strategic partnership with AAAM would facilitate implementation of the bank’s automotive programme.
“The automotive programme aims to catalyse development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA),’’ he said.
David Coffey, CEO of AAAM was also quoted as saying “the signing of the MoU with Afreximbank was an exciting milestone for the development of the automotive industry in Africa.
“At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa.
“Having Afreximbank on board is a game changer and a hugely positive development,’’ he said.
He added that it was wonderful to have a partner that was committed as the AAAM to drive the development and growth of the sector on the continent.
Under the terms of the MoU, both parties will work together to foster the emergence of regional value chains.
This is with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers and local partners.
The statement added that the two organisations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters.
This was in order to enable the manufacture of automotive components for supply to hub assemblers.
“To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain.
“The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, among others,” the statement said.
The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat the development of coherent national, regional and continental automotive policies, and strategies.
The organisations said that with an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth and a growing middle class, African countries were increasingly turning their attention to support the emergence of their automotive industries.
They added that the collaboration between Afreximbank and AAAM would be an opportunity to empower the aspirations of African countries toward refocusing their economies on industrialisation, export manufacturing and fostering the emergence of regional value chains.
Other areas covered by the MoU include working with the African Union and the African Organisation for Standardisation.
“This is to harmonise automotive standards across the continent and developing an automotive focused training programme for both the public and private sector,’’ the statement added.