The idea of manufacturing electric cars is not new to Africa. Many key auto hubs in South Africa and Morocco have hinted at mega and giga factories in their electric cars bid to remain relevant and tap a fast-rising global market.
Mineral-rich countries like the Democratic Republic of Congo (DRC), Zambia, and Mozambique are also been eyeing the market for decades with big intentions of becoming major suppliers of electric vehicle batteries.
However, for these countries to competitively bid for a major stake in the global electric vehicle market, industry experts say they should form regional value chains to cut cross-border trade costs and barriers to investments.
Speaking on this, Kenya’s energy cabinet secretary’s economic advisor, Eric Mwangi, said during a recent webinar on electric mobility in Africa that ‘countries need to package themselves as a regional market to attract investments from original equipment manufacturers (OEMs) with global supply chains.’
Most OEMs, he argued, always think of locations as regions rather than countries or entire continents and therefore, regional blocs like Southern, Eastern or Western Africa can present a collective and compelling package that would attract a cluster of OEMs.
“So, you’re not talking about Kenya’s 50 million population and, you know Ethiopia with 100 million and then., so you are actually talking about 450 million people as the potential market, you start to look a lot more compelling than if you’re trying to have an individual conversation,” he explained.
Taking a Positive Step
Some African countries are already taking a bold step to unify their ambitions by merging interests and resources to achieve common goals. All the ambitious bids of the other African countries have been largely country-based, with the exception of DRC and Zambia, which have launched a joint bid.
In April 2023, African Business reported that the African Export-Import Bank (Afrexim Bank) and the United Nations Economic Commission for Africa (ECA) had signed a framework agreement with the Democratic Republic of Congo and Zambia for the establishment of special economic zones for the production of electric vehicles and batteries as the continent looks to add value to surging demand for its critical minerals.
Both countries have major reserves of some of the critical minerals needed to produce batteries for electric vehicles and other technologies key to the green energy transition. The DRC accounts for approximately 70% of global cobalt supply and 88% of cobalt exports.
The two countries together contribute 11% of all copper supply globally. Both countries also possess reserves of lithium, a key ingredient in electric vehicle batteries. But until now both nations have been relegated to the role of suppliers of unprocessed critical minerals to foreign manufacturers.
Market Analysis of Electric Cars in Africa
According to a publication by Mordor Intelligence, the Africa Electric Vehicle Market was valued at USD 11.94 billion in 2021, and it is projected to reach USD 21.39 billion by 2027, registering a CAGR of 10.2% during the forecast period.
The COVID-19 pandemic’s impact on the African electric vehicle sector is unavoidable, as it has damaged practically every other industry in the market.
Over the long term, African countries such as South Africa, Egypt, and Morocco, among others, have established goals to reduce car emissions in upcoming years. They have begun to promote the development and selling of the EV market and the associated charging infrastructure.
For instance, Abdul Latif Jameel Finance Egypt has established a new financing program for electric cars (EV), the first of its type in Egypt, and supports the Egyptian government’s calls to “go green.” The new initiative will pay clients up to US$ 208,900 over five years to help enable access to EVs and stimulate the expansion of Egypt’s EV industry. The program’s launch coincides with Egypt’s impending EV adoption.
The number of charging stations nationwide is growing, and Egypt is anticipated to have its first domestically-built electric vehicle in 2023. The government is incentivizing customers to buy electric vehicles.
Is Africa Ready for the Big Market?
Every year, about 600,000 people die from air pollution in Africa. These deaths are estimated to have cost the continent a whopping $215 billion in 2013.
Today, Africa contributes only 3% of global greenhouse emissions, and although the continent is expected to be the last continent to transition from fossil fuel to electric cars, it has a big role to play in the global market. African governments have an important role to play in fast-tracking this adoption. Europe is employing strict regulations to ensure that by 2035 all new cars will be emission-free, and the success of this projection is dependent highly on the African continent.
To achieve success, Africa must ensure that laws and policies are reviewed to ensure that they fit into the current scheme of things on a global scale. In Nigeria, for example, a senator sponsored a bill to phase out fossil-fuel vehicles and make electric cars mainstream by 2035. He was, however, forced to withdraw the bill because Nigeria is an oil-producing country. Fast forward to this year, a Nigerian government automobile agency says that in the next ten years, 50% of the cars produced and assembled in the country will be electric.
How can the Collaborative Production of Electric Cars Unite Africa?
Regarding development, Africa still has a long way to go. While there have been positive and impactful strides towards development, it is still the beginning. Africa still faces corruption, climate change, increasing water scarcity, biodiversity and ecosystem loss, natural disasters, energy crises, poverty and more. All these issues threaten the development impact within the continent and the quality of life for those residing there.
According to experts, one of the major factors threatening Africa’s unity is its dependency on erstwhile colonial masters for foreign aid. It has also been identified that if the continent can collaborate on production, it would foster unity because not only will it promote regional integration, it will enrich the continent and reduce dependence on foreign countries.
The self-sufficiency of African states will help the continent to look inward and empower its leaders and citizens to make informed decisions.
If African countries with the potential to upscale electric car production collaborate, it will allow the continent to establish itself as a major player in the sector – something the individual countries cannot achieve on their own. It would also help to defend the sovereignty, territorial integrity and independence of its Member States. In addition, it will accelerate the political and social-economic integration of the continent; promote and defend African common positions on issues of interest to the continent and its peoples.