Africa’s potential as an automotive market is very clear, says Mike Whitfield, the Managing Director of Nissan Africa. The continent has only 1% of the world’s automotive production, but accounts for 17% of its population.
But if this potential is to be unlocked, then all stakeholders have to work together to ensure that the automotive components of the African Continental Free Trade agreement (AfCFTA) are implemented.
Whitfield, the president of the African Association of Automotive Manufacturers (AAAM) was speaking on the topic of “driving the development of the automotive industry across Africa’ as part of the inaugural South African Auto Week held at the iconic Kyalami Race Track north of Johannesburg on Wednesday 26 October 2022.
“We have to remember that if we look at the future potential market, we have two key manufacturing bases in Morocco and South Africa with Egypt emerging. It’s a huge opportunity for companies in Africa to capitalize on that and participate in the value chain.”
Turning to the continent’s transition to new energy vehicles (NEV), Whitfield says there is no doubt that Africa will make the transition but it will not be a journey which Africa leads. Instead, this will be a transition which different countries will complete at different times and in different ways. Africa’s journey will be one in which electrified technologies and innovations like Nissan’s e-POWER drive train will play an increasingly important role.
It remains significant, he says, that pre-COVID 19, the global automotive volume was 93-million a year. “There will still be a massive need for ICE (internal combustion engines) in Africa certainly for at least the next 10 years,” suggesting even more opportunities for existing African automotive manufacturing facilities to position themselves to meet this demand in Africa and beyond during this time.
Perhaps the greatest opportunity for Africa though is the fact that much of the raw materials essential to the creation of the batteries that power EVs are sourced from Africa.
“Africa can get the benefit of this global trend towards NEV if we add beneficiation to the raw materials that are going to be increasingly in demand across the world,” he says, citing the example of the Democratic Republic of Congo which intends making this a pre-requisite for the sourcing of any of these minerals from the country in future.
The greatest immediate challenge for Africa though remains the importation of grey vehicles. Legislation is the only way to police this and it is no coincidence that the three biggest markets in Africa; South Arica, Morocco and Egypt have all passed laws to control this, he says.
Eradicating grey imports is not something that can be left to the AfCFTA to resolve but has to be implemented by the individual countries themselves. But the other important driver behind grey imports remains affordability.
“It comes back to affordable mobility and the only we are really going to address this is through access to vehicle financing (of new vehicles) and in this case affordable vehicle financing,” he says.