Historic new deal could secure Africa's automotive future

A historic deal has been signed by 12 automotive associations across Europe and Africa with an eye to accelerating the development of the African auto sector.

While many across the continent and beyond view the automotive sector as playing a key role in African industrialisation, it comes with many challenges.

Read more: Germany's plan to increase innovation & development in Africa

Nonetheless, the African Association of Automotive Manufacturers (AAAM) believes that trade between nations across the continent can be bolstered and diversified through the development of a Pan-African Automotive Pact. Such a pact would look to expand the continent's market for new vehicles from one to five million units as well as connect regions.

Infrastructure in some parts of Africa still resembles much of that built by the former colonial powers. Road links between competing European spheres of influence were often discouraged, and in newly independent nations, border controls tended to be tightened as a means of protecting internal trade. 

Roads built by the former powers tended to lead from mineral-rich inland areas to ports and coastal towns for transport of goods back to Europe, rather than between neighbouring areas.

A number of modern major infrastructure developments, such as the Trans-African Highway network, are in place as a way to remedy this, but this must also be accompanied by a bolstering of the auto sector.

One of the catalysts that led to the signing of the automotive agreement was the launch of the AfCFTA – African Continental Free Trade Area in 2019, which aims to ultimately create the world's largest free trade area among all 54 African nations. 

The MoU was initially pushed by the AAAM, along with the German car association the VDA, and the German-African business association Afrika-Verein, and has the support of both the European and African Unions.

According to the AAAM, the deal aims to "grow the automotive sector in Africa through integration into the global and European value chains".

Read more: What is the human cost of the green & digital transitions?

Following the signing, Dave Coffey the CEO of AAAM, said: "The trade and investment climate in Africa can only be improved together. We are convinced that Africa has great potential to develop a promising automotive industry that will provide long-term employment.

"The fact that African and European associations have agreed on key points to further develop the industry on the continent is an important milestone. Now political representatives are to support this by creating the framework conditions for the industry to develop and grow."

- View a full list of signatories.

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