When looking at the rest of the world, Africa’s automotive industry is still in its infancy. Despite having a population of over 1.3 billion people, the region experiences some of the world’s lowest motorization rates. The good news is that the automotive sector in Sub- Saharan Africa holds immense untapped potential if the right conditions are established. This has led industry leaders to dub the automotive market in Africa as the “next frontier” for industry growth.
Sub-Saharan Africa has a substantial population and a growing middle class, which creates significant market potential. As more people achieve higher income levels, the demand for cars, both new and used, is expected to rise. The automotive industry is a relatively sophisticated sector and Sub-Saharan Africa (SSA) is experiencing rapid market expansion and is facing an estimated automotive trade deficit of $16.3 billion. It has become crucial, now more than ever, to attract investments efficiently. Several countries in the region have started to develop local automotive manufacturing capabilities.
South Africa has historically been a prominent player in this regard, with a well-established automotive industry and within the East African Community, Kenya boasts the most advanced automotive industry, contributing 80% of the total production of vehicles used in the East African Community. Namibia’s location and proximity to regional networks and OEMs make it an attractive destination for automotive investment as the port of Walvis Bay offers strategic access to key markets such as Europe, the Americas, and Southern Africa.
SSA countries the likes of Nigeria, Namibia, Kenya, Rwanda, and Ghana, have also shown interest in developing domestic vehicle manufacturing capabilities, but despite the progress in domestic production, the automotive sector in SSA heavily relies on imports for both new and used vehicles. Used imported vehicles, sometimes referred to as “grey imports,” are particularly popular due to their affordability. Kenya, Ghana, and Nigeria have been major destinations for the import of used vehicles from Japan, Europe, and the United States.
The future development of Africa’s automotive industry carries the promise of a major economic impact on the continent, particularly if manufacturers and service providers strategically position their operations regionally and cultivate local supply chains, both upstream and downstream. A robust automotive sector would not only boost GDP and employment, both directly and indirectly but also contribute significantly to government revenues and improve the overall trade balance
Governments in the region have been taking steps to support the automotive sector’s development, by the implementation of favourable policies, tax incentives, and the establishment of special economic zones to attract investments in manufacturing and assembly plants. I believe that the key is to broaden the market through regional integration, enabling large-scale and productive investments in the automotive sector. By doing that, countries can facilitate economic progress and generate more employment opportunities across the region.
Nigeria and Kenya are embarking on plans to establish a domestic automotive production sector. Ghana has managed to successfully attract the interest of several prominent global Original Equipment Manufacturers (OEMs) since 2019, a development triggered by the introduction of the Ghana Automotive Development Policy (GADP) in 2018. In a significant step, Toyota Tsusho Manufacturing Ghana inaugurated its plant in 2021, commencing assembly with the Toyota Hilux pickup as its maiden model.
Over the past couple of years, there has been a global transition happening towards electrical vehicles (EVs). The shift can largely be attributed to countries’ commitment to the reduction of emissions, as laid out in the Paris Agreement on Climate Change. The European Union is said to ban the sale of petrol and diesel vehicles by 2035, which is quite ambitious. This however will have a direct impact on SSA vehicle exports to the EU. African vehicle manufacturers’ production lines and manufacturing equipment will have to be upgraded.
The future development of Africa’s automotive industry carries the promise of substantial economic impact on the continent, particularly if manufacturers and service providers strategically position their operations regionally and cultivate local supply chains, both upstream and downstream. Here Omron will play a pivotal role. Omron can contribute by enhancing automotive manufacturers’ processes, assisting with quality control and supporting operational efficiency.
The Rwandan government is investing efforts in the automotive sector, with a strong emphasis on electric vehicles. Initiatives include the assembly of electric motorbikes and cars as part of the country’s move towards a more sustainable transportation system. Several companies have started operations to assemble electric motorbikes. To support domestic automotive production, efforts have been made to develop local component manufacturing industries. This reduces reliance on imports for parts and helps in job creation. While the adoption of electric vehicles has been slow in Sub-Saharan Africa, there has been increasing interest in exploring EV technology and infrastructure. Some countries in SSA have started to promote EVs as a means of reducing emissions and dependence on fossil fuels.
In the South African context, the sale of electronic vehicles can be seen as an effort to de-carbonise the transport industry. Electric vehicles are more readily available with Haval planning to sell their Ora to the South African market in 2023/2024. It was launched at the Nampo Harvest Show in Bothaville, South Africa. The sectors that have been identified as opportunities for investment regarding EVs are the public transport sector, micro-mobility as well and private passenger vehicles. South Africa is a signatory to the Paris Agreement and has agreed to actively limit greenhouse gas emissions. The public transport industry contributes to 10.8% of the country’s emissions. EVs are an important mechanism in decarbonising the transport industry through the reduction of direct tail-pipe emissions. A transition to zero-emission vehicles could contribute significantly towards achieving South Africa’s GHG emission reduction
The future development of Africa’s automotive industry carries the promise of substantial economic impact on the continent, particularly if manufacturers and service providers strategically position their operations regionally and cultivate local supply chains, both upstream and downstream. Here Omron will play a pivotal role. Omron can contribute by enhancing automotive manufacturers’ processes, assisting with quality control and supporting operational efficiency.
By providing one-of-a-kind automation systems, solutions, robotics, and sensor technologies, Omron can assist local manufacturers in streamlining their production lines, reducing errors, and increasing productivity. Notably, Omron’s expertise in data analytics and smart manufacturing can aid in optimizing resource utilization and supply chain management, fostering a more sustainable and resilient automotive manufacturing ecosystem. Omron is committed to innovation and has a track record of global success. The company is well-positioned to empower Sub-Saharan African countries to accelerate their automotive industry growth, ultimately contributing to job creation, technological advancement, and economic prosperity in the region.
A robust automotive sector would not only boost GDP and employment, both directly and indirectly but also contribute significantly to government revenues and improve the overall trade balance
