African automotive association sees Egypt as Africa’s biggest automotive market in the next decade: A delegation of automotive and automotive components producers attended a meeting of the African Association of Automotive Manufacturers (AAAM) yesterday to look at potential investments in Egypt’s automotive industries. Participants Enterprise spoke with at the meeting yesterday see potential for Egypt’s automotive industry to become the largest market in the continent by the middle of the next decade, supported by existing incentives and market dynamics, along with government plans to localize the industry.

What went down at the meetings: The AAAM delegation toured EP, where they met with key figures from Egypt’s automotive industry, government officials, and existing investors to get a feel for the current market dynamics and incentives on offer for the industry, as well as the challenges and future prospects. “The purpose of the visit is to introduce what Egypt has to offer to the automotive market, and show how serious the stakeholders are — mainly the government and the private sector and companies that have already invested, like Nissan. We hope to create the right level of understanding based on which different automotive players can make their own investment decisions,” AAAM President and Nissan Motor Corporation’s Group Strategic Advisor for Policies, Political Affairs, and External Relations Mike Whitfield told Enterprise.

Who was there: Representatives from automotive manufacturers and automotive component suppliers joined the delegation, including from Volkswagen Group South Africa, Toyota South Africa Motors, General Motors Egypt, and Robert Bosch-Africa, in addition to prominent players in Egypt’s automotive industry. Also joining them were several government officials, including Trade and Industry Minister Ahmed Samir and Suez Canal Economic Zone (SCZone) head Walid Gamal Eldin, as well as representatives from the SMEs Authority, the Trade and Industry Ministry’s automotive manufacturing unit, and the East Port Said Development Company.

Egypt is already on the map, but it’s poised to be the leader: “Today if we look at the automotive industry in Africa, some 1.1 mn vehicles are produced every year — 700k of which come out of South Africa, Morocco, and Egypt,” Whitfield told Enterprise. Egypt currently accounts for the smallest portion of that number, with just 100k vehicles produced every year, compared to 500k in each of South Africa and Morocco. “But if we look at market trends, Egypt is headed to become the most significant — and potentially the biggest — market. We believe that Egypt can reach that milestone within the next 10 years,” he said.

In case you needed reminding: Egypt really wants to develop + localize the automotive industry: The government has been working on a national strategy to develop the automotive industry, known as the Automotive Industry Development Program (AIDP), which could be implemented in the back half of this year, sources from the Trade and Industry Ministry previously told Enterprise. AIDP will provide incentives to carmakers in a bid to increase local assembly and component manufacturing here, up the sector’s competitiveness to become a regional manufacturing hub, and bolster export volumes.

What we already have going for us: The Egyptian market has attractive demographics, including a large population, supportive infrastructure, as well as proximity to other markets and streamlined logistical processes, and attractive construction, energy, and labor costs, several participants noted. Investors in EP specifically are able to enjoy 100% customs exemptions, a five-year residency in exchange for investments, as well as special rules governing imports and exports through the SCZone, according to EP Chairman Karim Sami Saad. End products manufactured in SCZone facilities are also treated as local products, Sami Saad noted.

Businesses want to see a fully formed local industry in Egypt that caters to the rest of the continent: “Egypt’s potential is not only important for Egypt, but for the whole African continent. As Nissan, we have invested in Egypt for several years, and we see Egypt as a key manufacturing hub for us in Africa and exporting into Africa. The objective is not just to import car components and put it together — the objective is to create real localization,” Whitfield told Enterprise.

Egypt wants to position East Port Said as a hub for the automotive industry, with plans to set up a specialized zone for automotive manufacturing, which will be named the East Port Said Automotive Zone, or EPAZ, according to AAAM Vice President and EP Managing Director Ahmed Fikry. EP is looking to “attract a number of different brands from global automobile manufacturers to participate in a joint automotive manufacturing complex,” he said. EP is already a “prime destination” for the automotive industry to leverage local and global partnerships “to create a thriving automotive ecosystem that attracts investments, fosters innovation, and drives economic growth,” Saad said.

Investors want to see more — and gov’t is all ears: “The government is here to listen to the business community and help offer whatever is needed to bring this industry to its full potential,” Samir said at the conference.

Your top industrial development stories for the week:

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  • Sumitomo Electric broke ground on the first phase of its new pigtails cable factory in Tenth Ramadan City. The factory is expected to produce cables for 1 mn cars per year and provide 3.5k new jobs.
  • Turkish leather maker Iskefe Holding is considering investing USD 40 mn to build a leather factory and another USD 6 mn to revamp three existing facilities in Roubiki Leather City.
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