Monaco, Leutert, Otoo, Tulu, Brown - The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs - IndustriALL/FES Report Launch

Publication Type:

Compte Rendu / Report



Report of the Gerpisa monthly seminar, Number 261, Virtuel (2021)


Lorenza Monaco, GERPISA, ENS Paris-Saclay, University of Johannesburg

Georg Leutert, IndustriALL Director, Automotive and Aerospace industries

Brown Lai, (Automobile, Boatyards, Transport Equipment and Allied Senior Staff Association) AUTOBATE, country researcher for

Nigeria Kwabena Nyarko Otoo, Trade Union Congress, country researcher for Ghana

Sisay Tulu, Industrial Federation of Textile, Leather and Garment Workers Trade Union (IFT-L&GWTU), country researcher for Ethiopia

Full Text:

This Gerpisa seminar was dedicated to the presentation of the report The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs. This report was commissioned by the Friedrich Ebert Stiftung Trade Union Competence Centre and the IndustriALL Sub-Saharan Africa office.

Georg Leutert (IndustriALL): Africa, especially Sub-Saharan Africa (SSA), has not been important for IndustriALL, with the exception of South Africa, because there is a big auto industry and a strong labour movement. In South Africa, for example, the metal unions reached a collective agreement for the whole sector, which is exceptional for the region. This is not the case for the rest of SSA. However, more and more OEMs are setting up in the region or have shown a willingness to invest in the region. In a way, "Africa's time has finally come". For IndustriALL, the issue is international solidarity.
With Covid-19, it was impossible to organise an international conference. Hence the interest of this research.

Lorenza Monaco (ENS Paris-Saclay, University of Johannesburg): It is important to talk about the African auto industry. At present, the SSA economies are still little known and are expanding rapidly in the direction of industrialisation. The idea is to make these countries known and to explain the structural weaknesses they face.
What are the competitive advantages of these countries? The report describes the main investment initiatives in these countries. It describes the auto industry before Covid and in the early days of Covid. We should look at what happened after.
Several questions then emerge: What will happen to the promised investments now that Covid has happened? How can investments be guaranteed in the long term? How can we be sure that investments translate into quality jobs and what role can trade unions play in creating quality jobs?
SSA countries are trying to overcome their structural weaknesses, or distortions in their markets (e.g. high presence of second-hand vehicles). Most of these countries have signed agreements in principle with major manufacturers. In particular, Ethiopia and Rwanda have taken into account environmental issues: green growth in the car industry.
As far as labour is concerned, investments must be translated into jobs (there is a high unemployment rate in these countries), but also job quality. There is a lot of informal, precarious work and poverty wages in the labour market in these countries. To this must be added the lack of protection and anti-union policies.

Country case studies :

Kwabena Nyarko Otoo (Trade Union Congress, country researcher for Ghana): Before Covid, Ghana's economy was stable. Growth came from extractive industries, less from manufacturing. This resulted in a growth in wage employment (23.5% of the workforce in 2017) and a decline in self-employment (53.4% of the workforce in 2017). The Covid-19 worsens the employment situation. Growth is the lowest since 1994.
The automotive sector is still nascent. There is a lot of import of vehicles. And these are second-hand vehicles.
The state has an industrialisation policy, with the 'One district, one factory' programme. In 2019, the government's automotive industry development initiative seeks to make the country a hub for automotive production, which may cause a race to the bottom. These policies involve tax cuts for companies that do semi-knock-down (SKD) or complete knock-down (CKD), as well as a ban on the import of used vehicles.
Unions are already present in the car industry, notably the ICU, especially in dealerships and distribution. We can also see the emergence of a highly skilled workforce, which are workers difficult to organise in unions.
Another problem is that companies very rarely share their investment plans. So one cannot assess the sustainability policies of the investments. The volatility of these investments is high, as the car market in Ghana is very limited. The import of second-hand vehicles is increasing. The ban on the importation of used vehicles has met with a lot of opposition, especially from the importers' lobby.

Sisay Tulu (Industrial Federation of Textile, Leather and Garment Workers Trade Union, country researcher for Ethiopia): The car industry is divided into two: assembly and distribution. Imports dominate, with a volume of around 18,000 vehicles per year. The country's car industry is still in an embryonic state. There are 58 vehicle assembly plants (passenger, commercial, motorbike and bicycle) in the country, most of which are joint ventures.
Wages are still an issue in the sector, they are relatively low. There is no minimum wage in Ethiopia, nor at sector level. There is little unionisation in the sector and little social dialogue.

Brown Lai (Automobile, Boatyards, Transport Equipment and Allied Senior Staff Association, country researcher for Nigeria): There have been significant changes in the auto industry with Covid-19. Second-hand vehicles have saturated the fleet in Nigeria since 2014. The government has tried to limit the import of used cars.

Georg Leutert: Volkswagen wanted to invest in Africa and wanted these investments to be sustainable. We are surprised because the local people, including the trade unionists, wanted these investments to be sustainable and to create quality jobs.
The Volkswagen trade unionists in Germany met with the local unions. There are such local links. The work of this network has, on some occasions, helped to transform precarious work (piecework) into formal jobs. There is still a need to strengthen regional and sub-regional links (East Africa, West Africa, etc.). Trade unions can act to ensure that these investment projects are sustainable.
There are many issues that still need to be addressed. The aim is that this report will lead to a workshop in 2021.


Question: Why do skilled workers unionise less than others? In France, surveys show that, traditionally, trade unions in the automotive industry are dominated by skilled and semi-skilled workers. Why is this different in sub-Saharan Africa?

Kwabena Nyarko Otoo: Skilled workers are more difficult to organise. They tend to do without unions, unlike low-skilled workers. In unions there are conflicts about who to organise. In Ghana, unions did not address the senior staff. It is only now that unions are starting to reach out to these sectors.

Sisay Tulu: Technicians, engineers, etc., do not join unions. They don't see any interest in unions. If they have problems, they change companies, because their skills are scarce. Workers in assembly sites are easier to organise, as they have more grievances (low wages).

Question: Does the division between skilled and unskilled workers correspond to the division between permanent and temporary workers?

Ismail Bello: Skilled workers have more room to manoeuvre because their skills are harder to find.
Precarious workers are not even seen as workers, because they sometimes don't even have a contract, they are paid by the day, without holidays, etc. They are not seen as workers. They are not seen as workers of the company, but of the contractor. Sometimes they are in this situation for ten years. Those who have more permanence and have acquired skills no longer see the union as a tool.

Question: The role of the state is central. You need market regulations, investments, etc. There has always been a strong relationship between public policy, the market and manufacturers. In order to develop an African industry, you need an African market, i.e. to integrate the different African markets. Would this be a good or bad thing? One of the risks would of course be a race to the bottom. Cars are lasting longer and longer. Can we really regulate imports of used cars? What kind of industry does Africa want? An export industry, like Mexico, which exports almost all its production? Who would Africa produce for?

Kwabena Nyarko Otoo: Precarious workers sometimes don't even get the benefits of the law. There are two things: union-busting and workers who think they don't need unions.
Workers' organisations are hardly ever involved in free trade policies. There has been a process of market integration for 40 years, but the market is not integrated. As far as the car industry is concerned, the question is where it is going to settle permanently. Every country wants it, this produces a race to the bottom.
In Ghana, the government failed to ban used cars, it was too expensive politically. With low wages, everyone prefers second-hand cars. Buying a new car is out of reach for 90% of Ghana's workforce.

Question: Instead of free trade, can there be an Asian configuration? Each country keeps its industry, but they trade parts with each other.

Lorenza Monaco: In SSA there are big limits in the economy of scale, which is one of the main obstacles to localise production. One solution would be to create integrated regional markets. However, this can have negative effects, if it is corporate-led integration, without adequate support and not accompanied by sound initiatives also aiming at political, institutional, infrastructural integration. Left to corporate choices, we have cases like leather seat manufacturers in South Africa that have moved abroad, for example to Lesotho because labour costs are lower.
Often the vehicle models produced locally in Africa are models with European standards. Other models could be sold in a local market. There is a growing middle class in Africa, but it is often neglected by the manufacturers.

Question: In India, there are fiscal policies to encourage the sale of vehicles of a certain size. The state had an industrial policy that created a car market. This also encouraged the emergence of a local value chain, with Indian subcontractors. What about battery manufacturing? Are there any plans to manufacture batteries? The investors are often Chinese, what are their strategies? This is important because they do not have a tradition of social dialogue.

Sisay Tulu: Chinese investment is important in Ethiopia, as in textiles. In the automotive sector, Lifan has a trade union presence, but it is weak. The unions are not strong enough to negotiate.

Kwabena Nyarko Otoo: During the last elections in Ghana, the government made a lot of noise about the fact that Volkswagen manufactured vehicles locally. But how many of the components can be produced locally? The Chinese are already assembling vehicles in Africa, but they are unfamiliar with trade unions.


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