SACU weighs auto pact with Egypt as Africa chases 5 million vehicles by 2035

South Africa has put a SACU-Egypt automotive pact on the table as part of a push for regional cooperation, investment and industrial integration aimed at building an African automotive industry that can create jobs and expand trade.

Trade, Industry and Competition Minister Parks Tau made the call in an address to the Africa Automotive Investment Forum hosted by Afreximbank at the Rixos Hotel Alamein in Egypt on Friday. The forum was held on the margins of the inaugural Alamein Africa Forum. Afreximbank is headquartered in Egypt and was established to facilitate, promote and expand intra-African and extra-African trade.

Tau said governments, financiers, vehicle manufacturers, suppliers and investors need to work together to develop bankable projects, strengthen regional value chains and increase investment in automotive manufacturing. He also stressed the importance of using the African Continental Free Trade Area (AfCFTA) to expand intra-African trade and support industrial development.

The scale of the opportunity and the gap are both large. Africa has produced approximately 1,23 million vehicles overall, about 1,3% of global production. South Africa produced approximately 618 077 vehicles in 2025, while Morocco reported reaching one million vehicles in production in December 2025. Together the two countries accounted for more than 91% of Africa’s vehicle production.

“Africa still accounts for a small share of global automotive production, but the continent has strong foundations to build on,” Tau said.

Longer-term continental ambitions include increasing Africa’s vehicle production to between four million and five million vehicles by 2035, including new energy vehicles and related components. The AfCFTA Automotive Fund, supported by Afreximbank’s US$1 billion facility for local content development, is expected to contribute to strengthening local production and supplier networks.

On the proposed pact between the Southern African Customs Union and Egypt, Tau said the concept of automotive pacts within Africa has been under consideration for some time, including work undertaken by the African Association of Automotive Manufacturers. Industry has long argued for Africa to build a viable and competitive automotive manufacturing sector, he said, and leading automotive economies on the continent will need to cooperate in a more structured way through industrial and trade arrangements that promote complementarities rather than fragmentation.

Within SACU, that thinking has informed consideration of possible automotive pacts with key African partners, including Egypt and Algeria. Tau said the proposal for these Industrial Participation Agreements was presented to SACU structures as part of broader discussions on regional industrialisation, value chain development and strategic responses to changes in the global trading environment. SACU has noted the increasing importance of developing resilient African production systems in light of heightened protectionism, supply chain vulnerabilities and growing market access uncertainty in traditional markets.

“Against this backdrop, SACU sees value in exploring structured partnerships with major African economies such as Egypt to strengthen developmental integration and expand intra-African trade,” he said.

According to the address, a SACU-Egypt Automotive Pact presents several opportunities: supporting economies of scale in production and trade, encouraging complementary production patterns rather than duplication of small-scale production of similar competing models in separate markets, increasing intra-Africa trade in new vehicles and components, facilitating trade diversion towards African suppliers where commercially viable, and creating a viable basis for supplier development and feeder industry growth.

Tau said the South African Automotive Master Plan 2035 has government and industry working together to expand production, deepen local content, increase participation by black-owned and women-owned firms, strengthen supplier capability and use regional markets as a springboard for sustained industrial growth. The country is also seeking investment across the full automotive value chain, including vehicle assembly for passenger vehicles, light commercial vehicles, buses and trucks.

South African firms are ready to invest outward into African markets in assembly, components, dealerships, after-sales services, logistics, charging infrastructure, battery value chains, industrial park development and supplier partnerships, he said.

He described Egypt as a particularly important partner, citing its position as one of the continent’s largest and most diversified economies, with substantial industrial capacity, a large domestic market and a strong geographic position linking Africa, the Middle East and Europe.

Tau is part of President Cyril Ramaphosa’s delegation to the 8th African Union Mid-Year Coordination Meeting. Ramaphosa is set to lead the Southern African Development Community’s participation at the meeting on Sunday.

The account above is drawn from the government’s own summary of the address rather than the full text of the Minister’s remarks. The proposed pact remains under consideration within SACU structures, and no date has been given for a decision.

Source: SAnews (South African Government News Agency), https://www.sanews.gov.za/south-africa/call-stronger-partnerships-drive-automotive-investment-job-creation