ALGIERS: In a significant address at the African automotive trade show in Algeria, the President of the African Association of Automotive Manufacturers (AAAM) and CEO of Volkswagen Southern Africa, Martina Biene outlined the institution’s strategic vision for establishing a competitive continental motor industry. The event, hailed as a landmark moment for the sector, underscored Africa’s collective determination to evolve from a primary importer of vehicles to an integrated manufacturer and exporter.
Biene commended the Algerian government for its leadership in hosting the exhibition and for its own initiatives in localising vehicle assembly. She emphasised a vibrant automotive sector is central to Africa’s industrialisation, critical for job creation and for fostering intra-African trade.
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Martina Biene
In 2020, the Bank launched an automotive strategy to catalyse the development of the sector, a vision now anchored within the broader framework of the African Continental Free Trade Agreement (AfCFTA). This strategy rests on three main pillars: developing national automotive value chains to enable countries to specialise in areas where they are most competitive; providing automotive financing to ensure businesses and governments can access capital and guarantees for large-scale projects; and focusing on policy and capacity building to create a sustainable environment for industry growth.
Building on this, the Bank worked with the AAAM and the AfCFTA Secretariat to develop a continental strategy, known as the Auto Pact, which was adopted by AfCFTA ministers in 2023. To support this, a one billion US dollar automotive fund was launched to finance and de-risk investments across the continent.
A commissioned study on continental value chains revealed significant opportunities not only in vehicle assembly but also in parts manufacturing. The strategy promotes regional integration, where countries pool their strengths. For example, Ethiopia’s strong leather processing base could supply upholstery, Ghana’s rubber industry could become a hub for tyre production, South Africa could supply catalytic converters and specialised components, and Algeria’s growing assembly plants could serve as a hub for vehicles destined for African and global markets.
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Victoria Backhaus-Jerling
However, challenges remain. CEO of AAAM, Victoria Backhaus-Jerling, who co-hosted a forum at the event, highlighted the full potential of the fund remains untapped due to a weak policy environment and the pending finalisation of the AfCFTA’s rules of origin for vehicles. She identified three primary obstacles: the urgent need for an agreement on the 40% local content threshold to provide investment certainty, the necessity for policy alignment and scale across the continent to avoid fragmentation, and the critical need for enabling infrastructure and affordable asset financing.
Both speakers agreed that while the path forward presents hurdles, the opportunities for Africa’s motor industry are immense. Success was stated as being dependent on a collective commitment from governments, industry leaders, and financial partners to harmonise policies, invest in infrastructure, and ultimately create a globally competitive industry that trades within itself.
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