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The Last Frontier: Prospects and Policies for the Automotive Industry in Africa
Submitted by Thomas McLennan, University of Cape Town on 27 févr. 2015 - 16:51
Type de publication:Conference Paper
Source:Gerpisa colloquium, Paris (2015)
Abstract: Sub-Saharan Africa (SSA) remains one of the last frontiers for automotive production. This seemed a distant prospect in the lost decades of the 80s and 90s. But since 2000, SSA has been one of the world’s fastest growing regions and over the next five years it is predicted that seven out of the 10 fastest growing countries in the world will be in Africa. The rapid growth in the middle class is already evident in the surge of demand for vehicles albeit from a very low base. Much of this demand is being met by imports because outside of South Africa, production is almost non-existent. Imports of light vehicles into SSA (excluding South Africa) grew at 19% per annum from 2000-2013. While such a rapid pace will not be sustained, we forecast that the light vehicle market will exceed 10 million units by 2030, which will make it comparable to the projected market in South America. The first key question, therefore, is the size and growth of the market in the region and sources of supply for these various national markets. This leads to a second question of whether and how the continent can begin to meet this booming demand by developing its own industry. The level of industrialisation in most parts of SSA is very low and manufacturing capabilities are limited. Nevertheless a number of the larger countries, for example Nigeria and Kenya, are already putting policies in place to encourage domestic production. Moreover, they are attracting the interest of leading western multinational carmakers as well as Chinese and Indian firms. Small scale investments in assembly are underway. To make the most of this opportunity, African countries will need to adopt appropriate policies and also accelerate the process of regional integration to allow for sufficient market scale. The first part of this paper therefore provides a comprehensive analysis of current and future market demand, production and trade across the region making use of international trade data as well as national statistics. The second part of the paper critically considers the policies that are being put in place, the strategies and investments of multinational firms and the prospects for an African industry outside the long established South African industry. It draws on national sources from the various countries as well as interviews with the regional headquarters of multinational firms, many of which are based in South Africa.
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