The National Association of Automotive Component and Allied Manufacturers (NAACAM) says it supports the recent trade and investment initiatives discussed between South Africa and Nigeria as part of the recently concluded State visit between the two countries.

The discussions included furthering trade and investment relations and the creation of a presidency-chaired Joint Ministerial Advisory Council on industry, trade and investment. Nigeria accounts for 64% of SA’s total trade within the West Africa region.

Renai Moothilal, Executive Director of NAACAM, said the African continent imports approximately R8 trillion per annum and intra-African trade is about R1tn. “This means there is about a R7tn trade deficit that Africa has with the rest of world.”

“Trade and industrialisation with the intent of intermediate and finished goods trade is therefore key. The auto sector fits the bill for both. Nigeria being Africa’s most populous nation, together with a strong regional market, should be positioned as an assembly hub.”

“African government-led industrial policies are crucial and should work towards ensuring system coherence with other major regional producers, such as SA. This would support an industrialisation automotive pact, as seen in other large regional groups such as ASEAN.”

He said it is important to ensure that appropriate institutions support the policy. Issues such as homologation, standards, intellectual property protection and border control are taken for granted in SA. Yet these are critical success factors for having functional auto industries in any country.

“There are immediate opportunities to attract key aftermarket component industrialisation projects. NAACAM is assisting partner country governments develop work programmes to unlock these. Such activities include unpacking the partner country’s component import basket and surveying the national car parc to identify components with high localisation potential.”

“We then help them understand the value chains behind such components to determine what needs to be in place to ensure a successful investment project, and also guide targeted support to potential component manufacturing entrants.”

Moothilal noted that such opportunities could be used to kickstart levels of manufacturing that have the potential to migrate to become OEM direct suppliers as the partner country’s assembly base expands.

He cautioned: “But overall, political will is key. Countries all over the world compete for the sector, so just having a big market potential will mean nothing if the policy frameworks are not in place and actively implemented.”

Key to this would be dealing with the import and sale of grey and used automotive products across the continent.

NAACAM is a member of the African Association of Automotive Manufacturers, a private sector initiative aimed at supporting automotive industrialisation across the continent, and is currently led by Thomas Schaefer, Chairman and Managing Director: Volkswagen Group SA and President: AAAM