Zimbabwe plans could dent South Africa exports

Plans by Zimbabwe to drive a policy promoting vehicle assembly through the importation of knocked-down kits and the imposition of higher tariffs on imported vehicles will significantly dent exports by South Africa's automotive industry.

Total automotive exports from South Africa to Zimbabwe were worth a total of R1.85 billion last year, of which R1.1bn was attributable to vehicle exports and R839 million to automotive component exports, according to the latest South African Automotive Export Manual published by the Automotive Industry Export Council.

Norman Lamprecht, the executive manager of the National Association of Automobile Manufacturers of SA, said on Friday that Zimbabwe had already introduced some surcharges on vehicle imports, which was similar to what Nigeria had done.

Lamprecht said this could have a significant negative impact on South African automotive exports because Zimbabwe was one of the top destinations in Africa for these exports. But he said any tariff increases by Zimbabwe applicable to South Africa would be in conflict with the Southern African Development Community (SADC) free trade agreement.

This agreement is between the 12 SADC member states with almost all tariff lines traded duty free.

Lamprecht said the agreement was subject to the rules of origin, which specified 40 percent local content and completely knocked-down vehicle assembly. In terms of the definition, this meant that all parts must be in unassembled format, which meant a production facility and paint plant were required.

Lamprecht said there was already some vehicle assembly taking place in Zimbabwe but it only amounted to a few hundred vehicles a year. He questioned whether it would be economically viable for Zimbabwe to produce vehicles on a small scale and protect its industry with high import duties.

Lamprecht added that Africa was the dumping ground for global used vehicles, which were the main competition for new vehicles and grey imports on the continent.

Reports from Zimbabwe suggest that used vehicle imports will still be permitted. He said used vehicle imports undermined any new vehicle manufacturing industry, which was the reason they were not allowed in South Africa.

Nigeria last year emerged as a potential competitor to South Africa for foreign direct investment by global multinational vehicle manufacturers.

This followed the Renault-Nissan alliance and west African conglomerate Stallion Group announcing their intention to jointly launch vehicle assembly in Nigeria and indicating there was potential to develop the plant into a major manufacturing hub for Nissan in Africa.

However, Nissan SA managing director Mike Whitfield, who is responsible for the sub-Saharan Africa region, including South Africa and Nigeria, stressed it did not pose any threat to the domestic motor industry and was an opportunity for co-operation and complementation.

This view was echoed by Trade and Industry Minister Rob Davies, who said last year the government had been working with its colleagues in Nigeria to support them in establishing motor manufacturing in that country because South Africa supported industrialisation of the entire African continent and believed there were synergies and complementarities South Africa could benefit from if Nigeria developed a motor manufacturing industry

Jeff Nemeth, the president and chief executive of Ford Motor Company of Southern Africa, confirmed in May that Ford was considering expanding its manufacturing footprint to other countries such as Nigeria.