By: Colin Windell
It is absolutely vital South Africa speeds up policy decisions and actions to facilitate the manufacture and transformation process to battery electric vehicles while, simultaneously, Africa needs to collectively and collaboratively adopt policies to beneficiate its raw materials.
Across the two days of the Africa Automotive Show that forms part of the Intra Africa Trade Fair (IATF), the sentiment from most of speakers reflected this with Dr Marit Kitaw a director of the African Minerals Development Centre saying: “If you do not add value to your raw minerals you are not doing anything for your people.
“To retain value, you need to do value addition that creates jobs and allows for skills transfer.”
The automotive potential in Africa remains largely untapped and it has an extremely young population compared to the average age statistics on other continents, meaning there is a constantly growing segment ready to become fully mobile – Cairo, for example, has a population of 20 million people and is possibly the largest mobility market in Africa, although it is estimated Lagos, Nigeria will be the world’s largest city within the next decade.
Chief Olusegun Obasanjo, former President of Nigeria and Chairman of the IATF2023 Advisory Council, said intra-African trade holds the key to unlocking Africa’s true potential and fuelling economic growth, fostering industrialisation and creating job opportunities for the people of the continent.
“It is through this spirit of cooperation and collaboration we will unlock the untapped potential of our continent,” he says, adding the trade fair signified the commitment of Africa and its diaspora nations to economic integration and to their collective determination to create a prosperous future.
President Obasanjo called on African government leaders, policy makers, and representatives to foster an environment conducive to trade by eliminating unnecessary bureaucracy, harmonising regulations and investing in necessary infrastructure.
Jean-Louis Ekra, Deputy Chairperson of the Intra-African Trade Fair (IATF2023) Advisory Council and a former President of the African Export-Import Bank (Afreximbank), says: “The African Continental Free Trade Area (AfCFTA) can break Africa’s colonial legacy of exporting raw materials and importing finished goods.”
He added this dependence made countries vulnerable to adverse trade shocks, liquidity constraints and macroeconomic management challenges.
Arguing that the situation needed to be addressed urgently, especially as it had worsened the effects of the Covid-19 pandemic, geopolitical tensions and climate change, he said: “AfCFTA cannot fail, especially given intra-African trade is estimated at 16%,” which was a level of trade that compared unfavorably with other regions.
Bloomberg’s head of Metal and Mining, Kwasi Ampofu said it was unfortunate no one African university offered courses in value addition – particularly as it pertained to beneficiating raw materials, adding: “We must build resilience in our collective policy making for AfCFTA to reverse current trends and we must transform by investing in the skills Africa needs.”
While AfCFTA still has to be formally put into place, several African countries as signatories to that agreement have already started to implement trade deals to facilitate their own automotive markets, one of which is between Zambia and the DRC – each country having raw materials necessary to electric vehicle batteries.
“A share agreement is in place and all that is needed now is investment,” says Ampofu.
While South Africa remains the largest automotive producer on the continent, the number of semi-knocked down (SKD) and completely knocked down (CKD) plants is growing with Egypt, Morocco, Ghana, Rwanda and Kenya already extremely active.
However, one of the major issues that needs to be dealt with is the issue of second-hand vehicle imports, many of which are 15 or 20 years old and not supported by any spare parts backup or even any level of quality and safety checking.
While second-hand vehicles provide affordable mobility solutions the problems linked to them far outweigh the advantages and Africa has to make mobility more affordable.
“Affordable vehicle finance stands not merely as a financial transaction but as a critical driver of economic inclusion and industry vitality,” says Theunis Smit, a co-founder of MotoData. It opens doors to mobility, economic growth and social empowerment.
“Banks are not merely money lenders; they create solutions and financing options that are not only flexible, but also competitive, addressing the unique challenges posed by automotive industries. The collaborative spirit between banks and industry stakeholders is paramount. By joining forces with manufacturers, dealerships and the value chain banks create comprehensive and affordable financing packages.”
An example of this is the recently launched Ecobank Single Market Trade Hub, which facilitates seamless payments and collections across 35 countries in Africa.
In a keynote speech read on his behalf, Morocco’s King Mohammed VI said: “Africa needs now more than ever bold, innovative initiatives to encourage private entrepreneurship and unleash the full potential of our continent.