The African Association of Automotive Manufacturers (AAAM) has entered into a Memorandum of Understanding (MoU) with the African Export-Import Bank (Afreximbank) to improve investment and financing in the automotive sector. The MoU was recently signed to boost regional automotive value chains and to finance the development of policies, technical assistance and capacity-building efforts.
The partnership between AAAM and Afreximbank will improve trade between African countries. “The strategic partnership with AAAM will facilitate the implementation of the bank’s automotive programme, which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA),” explains the president of Afreximbank, professor Benedict Oramah.
One of the core aims of the partnership will be value-added manufacturing of automotive parts and stronger partnerships between Original Equipment Manufacturers (OEMs) and their suppliers and partners. This will have a direct influence on Formex and our strong partnerships with various OEMs and Tier 1 customers across the continent.
Strengthening the automotive sector
The MoU starts with both organisations undertaking comprehensive studies of African automotive value chains and regional economic hubs. This will paint a broad picture of the African automotive industry and allow the organisations to plan the best way forward. The aim is to strengthen the African automotive industry; to make it more globally-competitive and more efficient in terms of manufacture and supply of components.
AAAM and Afreximbank will collaborate closely with other businesses and provide financial support to the entire value chain. This financial support will include lines of credit, direct financing, supply chain financing, project financing, equity financing and guarantees to industry stakeholders. This will allow many African countries to grow their automotive sectors and focus on manufacturing, supply and export of automotive products.
The two organisations will work alongside the African Union Commissions and the AfCFTA Secretariat to develop automotive policies and strategies in various African countries. Many of these nations are expanding their automotive sectors due to the abundance of labour and local natural resources, but they still need support and guidance.
AAAM and Afreximbank agreement is a milestone
“The signing of the MoU with Afreximbank is 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 inhibitors for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game-changer and a hugely positive development,” says the chief executive officer (CEO) of AAAM, David Coffey.
“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent. This collaboration will ensure genuine progress for our industry in Africa,” adds Coffey. The MoU will also bring in the African Union and the African Organisation for Standardisation to bring automotive standards to a world-class level.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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