This month’s 39th ordinary session of the assembly of the African Union heads of state and government has signed off on the Rules of Origin (RoO) for automotive products under the African Continental Free Trade Area (AfCFTA) Framework.

The African Association of Automotive Manufacturers (AAAM) describes the decision as “a defining milestone” toward creating a unified and globally competitive African automotive market.

The AfCFTA council of ministers’ meeting, held in Cairo in September last year, reached agreement on the RoO for vehicles and components, covering customs codes 8701 to 8716, with this decision now formally approved.

AAAM says the long-awaited decision provides the foundation for duty-free and quota-free trade in automotive products across the continent.

Under the new framework, vehicles and components must contain a minimum of 40% African (originating) content, with up to 60% imported (non-originating) materials allowed to qualify as ‘Made in Africa’ under the AfCFTA.

The AfCFTA council adopted the 60% non-originating ceiling subject to review after five years, noting that it was an interim measure to stimulate localisation and build industrial capacity across Africa.

“This is a historic breakthrough for Africa’s automotive sector,” says AAAM CEO Victoria Backhaus-Jerling.

“For the first time, we have a harmonised rule that defines what it means to be ‘Made in Africa’.

“This will unlock investment confidence, strengthen regional supply chains and drive industrialisation in line with the ambitions of the AfCFTA automotive strategy.”

In practice, the positive decision means that the trade framework will enable duty-preferential trade for countries that have classified their automotive tariff lines under Category A (immediate liberalisation) or Category B (phased liberalisation).

“The approval of the RoO for the automotive sector provides legal certainty for the industry to invest in local manufacturing of automotive products and trade under the AfCFTA,” notes AfCFTA Secretariat secretary-general Wamkele Mene.

“We call on the private sector to take advantage of this development and work with all the partners to drive inclusive growth and development of the African automotive industry”.

“This achievement is a testament to collaboration between the public and private sectors,” adds AAAM president and Volkwagen Group Africa MD Martina Biene.

“It creates the framework for African countries to trade vehicles and components with each other more competitively, and to position Africa as a meaningful player in the global automotive industry.”

She says the adoption of the RoO represents a critical milestone toward establishing a pan-African automotive ecosystem, driving localisation, boosting investment and enabling African consumers to access more affordable vehicles, built by Africans for Africa.

The AAAM is an industry body representing many of Africa’s automotive manufacturers, importers and allied industry players.

Its aim is to promote the development of a sustainable and globally competitive automotive industry across Africa through policy advocacy, partnerships and technical collaboration with governments, investors and trade institutions.