With an investment of up to $10m (R153m) in its new vehicle assembly plant in Ghana, Volkswagen South Africa (VWSA) has taken the next step towards building a pan-African automotive industry that could boost job creation in several African countries.
Speaking to The Herald on Tuesday, VWSA managing director Thomas Schaefer said the manufacturer hoped to play a leading role in bringing local production to several African countries that currently rely on the imports of used vehicles from the US and Japan.
This follows the signing of a memorandum of understanding with the Ghanaian government last week.
The memorandum, which was signed by Schaefer and Ghana’s trade and industry minister Alan Kyerenmaten, details VWSA’s plans to set up an assembly plant and test the feasibility of a mobility solution including car-sharing and ride-hailing services.
Also at the signing were German Chancellor Angela Merkel and Ghanaian VicePresident Mahamudu Bawumia.
Schaefer said the feasibility study for this concept – similar to the solution launched by the company when it opened its Rwandan assembly plant in June – should be concluded by the end of the year.
In turn, the Ghanaian government undertook to develop a comprehensive automotive industry policy, which is to include a preferential procurement policy for locally assembled vehicles.
Ghanaian President Nana Akufo-Addo said: “I assure VW and its local assembler in Ghana of the full support of government in creating an enabling environment and incentive framework to make their investment a major success.”
Schaefer believes this is key to growing a local industry.
“The government is working on a policy, with [former South African minister] Alec Erwin consulting, and once this comes into play, they will phase out used cars,” he said.
“Then the demand for new cars will go up and we’ll be in business.”
The country has a used vehicle market of between 300,000 and 400,000 cars.
“If you convert it to a locally manufactured [vehicle market], it creates jobs and wealth, and we think the market is good for 300,000 cars a year.
“The idea is to reach out from South Africa and start out with an assembly plant now, [delivering] 5,000 cars – but we want to grow this fast.”
The plant will receive semiknockdown kits from SA, with the Polo, Tiguan and Teramont to be assembled at the Accra plant.
About $10m will be invested in the first phase of the project, with an estimated 100 jobs being created initially.
The first of these vehicles is expected to be on the road by January in 2019.
Schaefer said he wished to assure South Africans that the company had no plans to divest, with VWSA growing and 170,000 vehicles being produced annually in Uitenhage.
He said the workforce was growing through the African expansions – which requires staff to disassemble vehicles into kits before shipping them to Ghana, Rwanda and Kenya.
The company is also in talks with other African countries, including Ethiopia,
“[One] cannot believe the interest we sparked with Rwanda; it inspired the whole of Africa – but for now our priority is Ghana, Nigeria and Ethiopia.
“We’re also in discussions with Kenya on how to [move] the business to the next level.”
In Nigeria, Schaefer said an MOU had been signed but the country was still working on its automotive policy.
“[We need] a policy that says [they] support local production and [will] cut off used car imports – if that happens, Nigeria is good for two-million cars a year.”
Schaefer said that in the past everybody tried to sell cars from South Africa into Africa, and it did not work.
“If you acknowledge that these countries want their own industry, it creates jobs.
“Once they get going, we can think bigger and say: why don’t we connect the [industries] and split the cake. It’s a win-win for everybody.
“I firmly believe Africa’s time is now.”