Addis Fortune (Addis Ababa)

8 June 2014

Ethiopia: New Association to Put Ethiopian Automotives On the Right Road

The new association, established with 14 members, will focus on improving the processes within the sector

The Automotives and Machineries Importers & Assembly Sectoral Association was established with an official launching ceremony at the Sheraton Addis Hotel on Thursday, June 5, 2014.

The Association was established with fourteen members who then selected four members of the board of directors and a chairman.

Abraham Abegaz, Chief Executive Officer (CEO) of Nyala Motors S.C, is the chairman of the Association. Alemayehu Mengesha (Eng), CEO of Race Engineering; Bekele Haile, owner of B.H Trading and Manufacturing Plc; Rolf Gautschi, general manager of Orbis Trading & Technical Centre S.C, and Chris De Muynck, managing director of MOENCO, are members of the board of directors.

"The formation of the association took a two years process," said Abraham Abegaz. "It has finally got recognition and certification from the Ministry of Trade (MoT), as well as the Documents Authentication & Registration Office (DARO)."

Ten aims were listed in the Association's structure document, including campaigning for the designing and implementation of policies that will support the Industry's strength, to work on the challenges the companies are facing locally and internationally and to solve problems that appear in the business process among the members.

"To be a member of the Association, the companies should have a license of sole distributer or assembler of automotives and machineries," said Melkamu Assefa, the CEO of Marathon Motors Engineering and founding member of the Association.

There are nine companies assembling vehicles in Ethiopia, including Mesfin Industrial Engineering; Maru Metal and Automotive Company; Bishoftu Automotive Industry; and Adama Agricultural Machinery Industry, with cars accounting for 80pc of production, according to recent data from the Metals Industry Development Institute (MITI).

The association members include prominent companies in the business, such as the Equatorial Business Group, Belay Ab Motors, the Automotive Manufacturing Company of Ethiopia (AMCE), Tana Engineering Plc and National Motors Corporation Plc.

In addition, members of the association include the sole distributers of Mercedes Benz, Hyundai, Nissan and UD trucks, as well as assemblers of branded automotives such as Toyota.

"The full percentage payment for a Letter of Credit (LC) from banks, the price defrayal by the Ethiopia Revenue & Costoms Authority (ERCA) on the automotives for taxation, the shortfall of foreign currency and the sluggish process at the Ministry of Transport (MoTr) in the registration of new brands are some of the major challenges we are facing," said Abraham. "This forces us to have excess stock in our warehouses."

According to Abraham, the main target of the Association is to address these major challenges that the companies are currently facing.

Ethiopia remains a relatively small market for automobiles, but in recent years it has shown a seven percent increase in open economy and consumer demand after the Growth & Transformation Plan (GTP) was designed and implemented in 2011.

Ethiopia imported 1,940 trucks in 2011/12, up from 1,008 in the 2010/2011 fiscal year, according to the Federal Transport Authority (FTA), which says 10,404 vehicles were imported during 2012/13. However, it notes an estimated 1,500 additional vehicles were likely to have been smuggled in.

The target is in line with the country's GTP for 2011-2015, which calls for 85pc local content in locally produced cars by 2015.

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