AUGUST 9, 2023
ACCESSING AFREXIM’S $1 BILLION FUNDING FOR NIGERIA’S AUTO INDUSTRY THROUGH AFCFTA
The Secretary General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, has highlighted the absence of Nigeria among the limited trio of African nations—South Africa, Egypt, and Morocco—qualified to access the $1 billion fund offered by Afrexim Bank. Addressing attendees at Zenith Bank’s international trade seminar in Lagos, Mene stressed the urgency for Nigeria to diversify its economy by venturing into automobile production, thereby bridging the substantial gap in the continent’s population.
AfCFTA’s assessment underscores a significant annual shortage of five million vehicles across Africa, with only South Africa, Morocco, and Egypt identified as genuine auto manufacturing nations. As part of efforts to foster intra-African trade, Zenith Bank signed a memorandum of understanding (MoU) with AfCFTA to establish a unified trade portal, named SMARTAfCFTA. The bank will contribute one million dollars towards funding this platform for trade information within the African continent.
Mene emphasized the identification of priority sectors for diversification, citing pharmaceuticals, agriculture, agro-processing, transportation, logistics, and the automotive sector. He urged Nigeria to incorporate the auto industry into its diversification strategy, as the continent’s current annual production of 900,000 passenger vehicles—largely attributed to South Africa, Egypt, and Morocco—falls significantly short of Africa’s burgeoning population. India, with a similar population size, manufactures five million vehicles annually. Mene projected that by 2035, Africa would need to produce five million vehicles each year to meet domestic demand, requiring broader participation beyond the existing auto-producing nations.
Mene outlined the economic potential of the auto sector, stating that for every unit of investment in vehicle assembly, four jobs are generated in the component manufacturing sector. In light of this, he praised Afrexim Bank’s commitment to providing a $1 billion facility for any country interested in commencing vehicle production for trade under AfCFTA.
Ebenezer Onyeagwu, the Group Managing Director of Zenith Bank, discussed the MOU with AfCFTA, foreseeing its positive impact on Africa’s prosperity and intra-continental trade. The forthcoming SMARTAfCFTA portal, developed by Zenith Bank, aims to showcase African products and services, empowering businesses across the continent to market and access desired offerings from various regions.
As the continent embarks on AfCFTA’s implementation, Nigeria’s exploration of the automotive sector could not only address the escalating demand for vehicles but also contribute significantly to industrialization, job creation, and innovation across Africa.