The African Export-Import Bank and the African Association of Automotive Manufacturers have signed a memorandum of understanding on the financing and promotion of the automotive industry in Africa.
Afreximbank President, Prof. Benedict Oramah, notes the strategic partnership with AAAM will facilitate the implementation of the bank’s automotive programme, which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).
Under the terms of the MoU, Afreximbank and AAAM will work together to enhance the emergence of regional value chains in Africa with a focus on value-added manufacturing created through partnerships between global original equipment manufacturers, suppliers, and local partners.
Both organizations plan to undertake studies to map potential regional automotive value chains on the African continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.
The Afreximbank and AAAM will also collaborate to provide financing to industry players along the automotive value chain in order to support the emergence of the African automotive industry.
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Potential interventions will include lines of credit, direct financing, project financing, supply-chain financing, guarantees, equity financing, among others in Africa.
The MoU also provides for the partners to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional, and continental automotive policies and strategies on the continent.
According to the AAAM: with an integrated market under the AfCFTA, abundant and cheap labor, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.
Therefore, the alliance between Afreximbank and AAAM will be an opportunity to fuel the aspirations of African countries towards re-focusing their economies on industrialization and export manufacturing and fostering the emergence of regional value chains.
The African Association of Automotive Manufacturers CEO David Coffey has also commended the move saying the signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa.