The signing in March 2018 of the agreement to establish an African Continental Free Trade Area (AfCFTA) is a significant step along the road to full regional integration in Africa. Achieving this long standing objective is critical for industrialisation in the continent and is of particular importance to the development of the automotive industry.
Economic growth rates in sub-Saharan Africa (SSA) since 2000 have been impressive, and in some cases even spectacular. Along with the burgeoning middle class, the market for motor vehicles is growing very rapidly albeit from a low base. However, much of this demand is being met by imports because outside of South Africa, production is almost non-existent. In countries such as Nigeria, Ethiopia and Kenya, there is some small scale vehicle assembly with minimal usage of domestically produced parts. But in most of the countries to the north of South Africa, the market is completely dominated by imports of (mainly used) vehicles. Sales of vehicles in SSA (excluding South Africa) amounted to 1.5 million in 2013, having grown by 14% per annum since 2003. With the economic slowdown of the last few years, the rate of sales growth has declined but the light vehicle market (including South Africa) will be very significant by 2030.
The question then arises as to where these vehicles be produced? Will the continent continue to rely on imports or can it develop its own industry which draws in a number of countries to create competitive regional automotive value chains?