Afreximbank, AAAM Sign the African Auto Industry Financing MOU

Posted on : Monday , 22nd February 2021

The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) to finance and promote the automotive industry in Africa.

"The strategic partnership with AAAM will facilitate the implementation of the Bank's automotive programme aimed at catalysing the development of the automotive industry in Africa as the continent begins trade within the African Continental Free Trade Area (AfCFTA)," said Afreximbank President Professor Benedict Oramah.

Under the terms of the MOU, Afreximbank and AAAM will work together to foster the emergence of regional value-added manufacturing chains, created through partnerships between global original equipment manufacturers (OEMs or vehicle manufacturers), suppliers and local partners.

The two organisations are planning to undertake studies to map the potential regional automotive value chains on the continent in regional economic clusters in order to enable the production of automotive components for the supply of hub assemblies.

To support the emergence of the African automotive industry, they will also work together to provide financing to industry players along the automotive value chain.

Potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees and equity financing, among others.

The MoU also provides for partners to support the development of coherent national, regional and continental automotive policies and strategies in conjunction with the African Union Commission and the AfCFTA Secretariat.

With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to supporting the emergence of their automotive industries, says AAAM.

The collaboration between Afreximbank and AAAM will therefore provide an opportunity to foster the aspirations of African countries to re-focus their economies on industrialization and export manufacturing and to foster the emergence of regional value chains. 

"The signing of the MOU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa," said David Coffey, CEO of AAAM.

"At the 2020 Digital Africa Auto Forum, the lack of affordable financing available to the automotive sector was identified as one of the key drivers for the growth and development of the automotive industry in Africa. Having Afreximbank on board is a game changer and a very positive development.

"It is wonderful to have a partner as committed as AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure real progress for our industry in Africa."

Other areas covered by the MOU include working with the African Union and the African Organization for Standardization to harmonise automotive standards across the continent and developing a vocational training programme for both the public and private sectors.