The African Association of Automotive Manufacturing (AAAM) recently stated that the continent’s automotive assembly industry has “great economic potential”. AAAM chief executive officer, David Coffey, says that the association is focused on ensuring that this potential is fully realised.

This can be achieved through closer partnerships between private manufacturers and governments, and to refine policies that create better investment potential, according to Coffey. This will require efficient collaboration between various African countries and strengthening of the value chain. 

Formex Industries has established successful partnerships with various international original equipment manufacturers (OEMs) and Tier 1 suppliers. As a leading manufacturer of automotive components and assemblies in South Africa, we are committed to working closely with industry stakeholders to improve the automotive sector in Africa.

Formex Industries female worker using a machine

African countries making great progress

Certain African countries, such as South Africa and Ghana, have already implemented in-depth automotive policies that are showing signs of success. These policies have helped to increase regional development and strengthen the value chain across the board. The South African Automotive Master Plan (SAAM) is one of the most in-depth examples of these guiding documents that can be used to support the entire sector.

Other African countries are following suit with examples of their own master plan documents. Egypt, for example, recently approved an automotive policy in March 2022. “This is a really big move because it is going to be based on the same framework that South Africa and Ghana have implemented, including the trade-related investment measures, as well as Chapter 98, which handles components for original-equipment manufacturer suppliers,” explains Coffey.

These policies will also allow African countries to implement inter-industrial partnerships and agreements, which will provide a supportive foundation for growth. “While AAAM believes that the Africa-wide interest in the automotive industry is important, it must also be noted that this should be a coalition of the willing because a key step in development is policy implementation,” says Coffey.

Formex Industries worker using a cutting and welding machine

Building a better value chain

Once these policies are refined and implemented, the investment will surely follow. AAAM has already visited various African countries to discuss their roles in the greater value chain. “As AAAM, our goal is to highlight the potential that the automotive industry has in Africa and to guide African countries in the right direction,” states Coffey.

Not every country can be an assembler, so we are spending much time looking at which countries could manufacture which components,” he adds. The New Development Bank (formerly BRICS Bank), has funded a study on the West African automotive value chain. This study aims to highlight the economic potential of this region and the benefits that these countries can provide to the continental value chain. “This includes looking at the raw materials that these countries have and investigating which interesting industries these countries currently boast,” Coffey explains.

Before the Covid-19 pandemic, over one million new vehicles were sold per year in Africa. The AAAM believes that by 2035, Africa can boost these numbers to five million. This, of course, will depend on continent-wide policy implementation and the investment ecosystem. For more information about our automotive components and products, please contact us today.

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 69% black ownership, of which 37% 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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