Development of the automotive industry in Senegal will be getting a boost from the Coega Development Corporation (CDC) that will provide advisory services and expertise to the West African country.
This follows this year’s Intra-African Trade Fair Conference opened by President Cyril Ramaphosa, and is part of the Coega Africa Programme.
“Final negotiations between Senegalese Investment Agency, PAIMRAI, and the CDC have recently concluded with the CDC and Automotive Investment Holdings (AIH) being appointed to elaborate a strategy for the development of the automotive industry in Senegal,” says Dr Ayanda Vilakazi, CDC Head of Marketing, Brand and Communications.
The Intra-African Trade Fair 2021 took place from 15-21 November 2021 under the theme African Continental Free Trade Area (AfCFTA) - a single market for goods and services across 55 countries, aimed at boosting trade and investment.
Analysis
The Senegalese Automotive Industry Strategy developed by the CDC and AIH will provide a comprehensive analysis of the automotive industry in Senegal, its potential and the upstream and downstream linkages that can be developed with countries such as South Africa and Morocco, which are the leading vehicle manufacturers in the continent.
The appointment of the CDC sees the organisation expanding its project footprint throughout the continent, with projects currently in Zimbabwe, Cameroon for the Central African Republic, and now Senegal. Drawing from 21 years of expertise in project managing mega and complex infrastructure projects in South Africa for public and private sector, the Coega SEZ has successfully developed its Automotive Zone and attracted investment exceeding USD 895-million.
Dr Vilakazi explains the Sub-Sahara Africa automotive sector currently accounts for less than 3% of global production, against 30% for China, 22% for Europe and 17% for North America.
“The motorisation rate in this region was very low in 2018, with 42 cars per 1 000 inhabitants, against 837 in the United States, 173 in China and 214 in South Africa, for a world average of 180 cars per 1 000 inhabitants.
“This rate hardly exceeds 3% in Senegal, which means only 30 people out of 1 000 own a private vehicle.”
Nascent
Apart from Nigeria and Ghana, the automotive industry remains nascent in the member countries of the Economic Community of West African States, whose process of industrialisation faces the threat of used car imports from Europe, Japan, United States, Canada, and other countries.
The sub-regional and regional integration, through the development of upstream and downstream links in the automotive industry value chain, will stimulate industrialisation and competitiveness throughout Africa. According to research conducted by Dakar’s Foreign Trade Office, about 100 000 vehicles are imported to the country every year, which require constant replacement of parts due to difficult climate and infrastructural conditions.
Senegal imports almost all spare parts. However, strong government focus on encouraging automotive industry in the country is an important driving force for Senegal. Stringent environmental regulations on pollution and carbon emissions are necessitating heavy investments.
As the leading Special Economic Zone (SEZ) in Africa, the CDC is poised to foster collaboration with the rest of the continent to promote the coordinating, championing, and driving of the implementation of free trade across borders and take advantage of supply chain networks and technological advancement.
“We believe the African Continental Free Trade Area (AfCFTA) will provide investors with easy access to new, rapidly developing markets while it has the potential to lift 30 million people out of extreme poverty but achieving its full potential will depend on significant policy reforms and trade facilitation measures,” says Ms Nkuli Mxenge-Mayende, CDC’s Global Market Manager.
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