Bus manufacturer AVM Africa is on the verge of clinching a US$100 million deal with BAIC Automotive Group of China in a development that could create thousands of jobs after Government banned importation of buses in the 2017 budget to give opportunity for the motor industry to grow.
The deal between AVM and BAIC was signed in December 2015 and was witnessed by Presidents Mugabe and Xi Jinping during the Chinese leader’s visit to Harare.
AVM Africa, which has a pedigree on the continent for supplying quality vehicles, is angling to get back to its former glory as the company used to manufacture buses for export markets in several countries across the continent.
A delegation of top officials from BAIC is expected in Zimbabwe this week to seal the deal.
Under the joint venture agreement, BAIC will bring equipment, machinery and technology. The Chinese company will also provide funds for re-tooling, assembly kits and plant rehabilitation.
Currently, AVM Africa is producing two buses a month but its partnership with the BAIC is set to increase production to 30 buses monthly, with prospects for growth.
Furthermore, the company will manufacture tractors with a targeted production of between 200 to 1 000 units per year.
In an interview with this paper after touring the AVM Africa plant last Thursday, Finance and Economic Development Minister Patrick Chinamasa said the fiscal intervention to ban importation of buses should spur local industry to grow.
“In the 2017 budget, I made a fiscal intervention to allow the local bus industry to grow by banning the importation of buses. The ball is now in the local producers to benefit from this fiscal intervention. My tour of this plant has enabled me to have a greater appreciation of the challenges that the company faces.
“Our measures are aimed at protecting local industries and we are encouraged that the company has the capacity to produce and export and also earn the much needed foreign currency for the country.”
AVM Africa executive chair Mr Kenneth Musanhi said the company could assemble buses at a lower price than imports.
“Our buses sell for about US$120 000 and these are products that are custom made for our roads. Imported buses cost about US$150 000 and they are of a lower quality than what we produce. Our operations have been affected by cheap imports yet our company has the capacity to produce better than the buses that we have been importing.”
Mr Musanhi said more than 2 000 direct jobs are expected to be created via the joint venture.
“Currently we have 74 employees, but if this joint venture succeeds, we will create more than 2 000 jobs excluding the upstream and downstream industry”