Business
Africa is the auto industry’s final frontier
Trade arrangement
Nigeria is not the only African country trying to promote domestic vehicle production and automakers are hoping their new association can help coordinate policies and investment in the region, Nemeth said.
“Everybody can’t have an assembly plant at once,” he said. “The idea would be having some kind of pan-African trade arrangement, where maybe we build engines in Uganda but put them in vehicles in Nigeria and then ship the vehicles back to Uganda, duty free.”
The only sub-Saharan African country with any real automotive production is South Africa, which has used government incentives to attract manufacturers.
Nigeria, which is hoping to emulate that success, had a flourishing automotive sector in the 1970s that floundered. It’s now seeking to revitalize the industry to diversify the economy away from oil as crude prices fall. Nigeria has allowed companies to import 2 fully-built vehicles at reduced duties of 35 percent for cars and 20 percent for commercial vehicles for every 1 built locally, while 100 percent importers pay a full 70 percent duty.
The federal government is focused on assembly operations for now, with the idea that components manufacturing will follow as the industry develops critical mass, said Luqman Mamudu, the director of policy and planning for the Abuja-based National Automotive Council.
Ford projects that the automotive industry in Africa will grow by at least 40 percent by 2020, said Nemeth.
“The opportunities are massive,” he said.
Source: Bloomberg Business
