DAVID FURLONGER: South Africa must fix its ‘55,000 shades of grey’ problem

Growing up in the shadow of the Volkswagen South Africa vehicle assembly plant in the Eastern Cape, Wamkele Mene saw first-hand the social and economic benefits of a thriving motor industry. He recalls how, when the Uitenhage (now Kariega) company was about to launch its first export programme, a neighbour who worked for the company was sent to Germany for quality training.

He returned skilled and better paid, but, most of all, says Mene, with a new sense of pride and self-worth.

Now Mene, secretary-general of the African Continental Free Trade Area secretariat, says he wants thousands more people to experience that feeling. He believes the motor industry can be the driver (pun intended) of general industrialisation across Africa.

The free trade area officially came into being last year but remains a work in progress. Though nearly all Africa’s states have signed the agreement, actual free trade remains a long way off.

The motor industry, however, has always been seen as key to making it work. As Mene told the South African Auto Week conference at Kyalami on Tuesday: “We won’t get there without the auto sector.”

Africa is home to 17% of the world’s population but only 1% of new-vehicle sales. Used vehicles, most dumped from wealthy nations, dominate nearly all markets.

South Africa is one of the few to ban used imports, except under special circumstances, though the moral high ground it likes to occupy in discussions with other countries was undermined this week when Kia South Africa MD Gary Scott revealed that about 55,000 used imports enter South Africa illegally each year. In all, he estimates there are about 440,000 on the country’s roads.

This “grey import” tide across the continent will need to be stemmed before dreams of a sustainable African motor industry can be realised. The South Africa-based African Association of Automotive Manufacturers (AAAM) is leading efforts to create four interlinked, regional industries, in Southern, East, West and North Africa.

Mene says every vehicle built in Africa creates four jobs in the components supply industry. South Africa and Morocco, at opposite ends of the continent, are currently the only countries with sizeable industries. He wants the benefits, such as foreign investment, infrastructure, skills transfer and employment, to be spread more evenly.

But it can be achieved only as a single African market, through the free trade agreement. “I see no reason why we can’t create a value chain across Africa for the motor industry.”

Egypt, Ghana, Ethiopia, Kenya and Nigeria are among countries with high hopes for their relatively small motor industries. Several others have the potential to contribute — if not as vehicle manufacturers, then certainly as suppliers. Rubber, leather and copper, says Mene, are among raw materials in demand by the global motor industry.

Toyota South Africa president Andrew Kirby adds nickel, manganese, cobalt, lithium and graphite — all in short supply as the motor industry seeks raw materials for its shift to electric vehicles — to the mix. These raw materials are all plentiful in South Africa and other African countries.

But it’s not enough simply to supply them. Kirby and Mene agree that instead of selling raw materials to foreign buyers, particularly China, for a fraction of their eventual value, African countries should seek investment to process them in Africa.

Mene admits that attracting foreign investment may be a challenge. Some countries have a reputation for not sticking to “the rule of law” or of ignoring criteria that attracted investors in the first place.

Now, with a free trade legal framework in place, he hopes investors will be more confident of investing. Africa, he says, has a once-in-a-generation opportunity to grow, and the motor industry is the avenue through which to do so. The opportunity must not be wasted.​