Corporate | 23 October 2019

On the road to mobility in Africa

7 min
1.3 billion inhabitants. Twice as many by 2050 and probably four times as many by the year 2100. If Africa is a vibrant continent with great potential, this is the result of its demography. But this also gives rise to the many and diverse challenges across its different regions. With the increase in its population, Africa is confronted by an accelerating rural exodus and rapid urbanisation. Mobility requirements have never been so pressing as they are today.
by Thomas AUDEBERT

After our road-trip in Asia, On'Air takes you to Africa, to discover the automotive challenges from 2019 to 2050!

Diverse mobility, a continent of contrasts

In Africa, the vehicle market is fragmented. And economic growth is uneven, depending on the country: flourishing in Ghana and Ethiopia, yet in recession in Southern Sudan.

In sub-saharan Africa, a region of 40 countries, only 100 000 vehicles were sold in 2017.

Charles Dovonou, Regional Strategic Product Manager for Groupe Renault

For Charles Dovonou, Regional Strategic Product Manager at Groupe Renault, this situation is explained by three factors: 

  • Economic development is still too weak. In sub-Saharan Africa, most people can’t afford to buy a new vehicle. Although a necessity, the car is still a luxury product in many countries. There is little local production, there’s a lack of demand and imported vehicles are subject to exorbitant import duties of up to 100%, as in Ethiopia.
  • Financing aids are almost non-existent, and interest rates are as high as 20 or 30% which means it is impossible for most people in the countries of sub-Saharan Africa.
  • Lax regulation of used vehicles. Due to the lack of affordable new vehicles, drivers turn to cheap second-hand imports that often belong to a bygone era. For example, you can find 15-year old imported used vehicles in Nigeria.

There you have it: the vehicle industry in a part of this region is still in its infancy, but that could soon change...

Multiplication of used vehicles
Changes are on the way in african automotive sector.

Africa producing cars ?

Faced with these challenges, the countries of the African Union are bringing inthe reforms needed to promote the growth of the car beginning with restrictions on used vehicle imports.

Kenya, for example, has imposed a maximum age of 8 years for vehicles, and intends to reduce this threshold to 3 years by 2021, which will reduce the availability of poor-quality used vehicles.

But without second-hand vehicles in a region that is dependent on them, how will people get about? The answer seems obvious : they’ll have to manufacture new vehicles!

The African Union brings together almost all the states of the continent To achieve this, the African Union, to which most countries on the continent belong, is developing an economic union to tear down customs barriers between the member countries. This project, known as the African Continental Free Trade Area (ACFTA) is designed primarily to promote inter-country trade and should change the landscape for the automotive industry.

Thanks to this project, in the future,

1. Car companies will be able
to set up easily in sub-Saharan Africa countries

2. It will create jobs &
encourage economic development

3. It will be easier to sell cars
with the abolition of import duties

4. It will enable wider access to
new vehicles for all

Set a course for sub-Saharan Africa !

With its presence in South Africa, Algeria, Egypt and Morocco, Groupe Renault is the leading automotive group on the continent of Africa and enjoys a strong image. In North Africa, the plants in Tangiers and Oran are in constant operation and are a guarantee of our presence.

Groupe Renault:

18%

market share in Africa

In 2017, the plant in Tangiers passed the million mark for vehicles produced since its inauguration.

Today, the ambition is to continue this development in the countries of sub-Saharan Africa. Especially in Nigeria. Announced in July, the partnership with local group Coscharis will allow the production and distribution of vehicles in the country. In October, production of the Renault Logan and Duster began at the Coscharis factory in Lagos, and the Group’s dealer network will be selling the Renault Duster Oroch and Kwid on this key market.

Partnership between the Renault Group and the local Coscharis group
Renault Duster will be one of the vehicles made in Nigeria with Coscharis group.

As the foundation stone of an ambitious project, Groupe Renault’s presence in Nigeria is bound to lead to similar partnerships to take advantage of opportunities in the ACFTA. With our knowledge of these countries and our determination to offer appropriate vehicles, there will be no lack of opportunities.

A two-speed mobility

But we must be realistic. "The infrastructures in some of these countries are still not up to scratch, says Charles Dovonou. The countries have invested, but the climate and maintenance conditions lead to rapid deterioration and require new investments that are hard to sustain".

Similarly, there is scarcely any public transport in the majority of countries on the continent. "People get about on two wheels", he says. "Where they do use public transport, we are talking about overcrowded vehicles with no safety standards". The development of mobility requires improved travel conditions, particularly given the urbanisation that Africa is experiencing.

We are also seeing the gradual emergence of a solid middle class.


Estimated at 350 million by the African Development Bank, it could triple to reach 1.3 billion individuals in 2060.


Average class is growing up fast
Thanks to its youth and demography, average class is growing up fast.

It is comprised, amongst others, of former expats, who have studied abroad and are ready to commit to their countries. They are part of the emergence of a new mobility for Africa, that needs the reliability of a new vehicle. But this transformation isn’t always happening smoothly.

In November 2018, Romain Kouakou, the General Director of Road Transport and Traffic for Ivory Coast, speaking at the Forum Smart City du Grand Paris, reminded the audience that the emergence of the middle class in his country had led to a considerable increase in the number of vehicles on the road, despite an inadequate infrastructure that lacks quality, resulting in an estimated annual loss of 400 million euros. Whilst mobility is still under development in many parts of Africa, other sectors are thriving and could entail African automotive development.

Africa and smart payments

In some countries, the appearance of the smartphone has revolutionised habits and economic development. Have you heard of M-Pesa, for example? M, as in mobile, and Pesa, which means money in Swahili, is a microfinance system based on the mobile phone that requires no bank account. It was introduced in Kenya in 2007 and revolutionised the retail landscape in this region and now has its imitators. Charles Dovonou tells us about the strength of these local undertakings. "Mobile payment systems, like M-Pesa, Orange Money and MTN Money have 350 million users across the continent, and the numbers are growing all the time, thanks to the ubiquitous smartphone. These companies understand the mentality and the culture of these countries and, sooner or later, we ought to expect this disruption to turn the vehicle scene in Africa upside down".


(French speaking - english subtitle available)

Technology at work for cities

Instead of an industrial revolution, Africa is undergoing a revolution in services, in particulier via technology. Rwanda, for example, is becoming a technology hub. Kigali is also in charge of a study group that has brought together a number of cities for a project known as "Smart Cities & Communities".

Africa is undergoing a revolution in services
Tomorrow’s smart cities will be African too.

There are 9 cities with over 5 million inhabitants in Africa, 22 by 2050.

To support this change, some countries have already begun to develop their own smart cities, which should become centres of excellence in profitable sectors. One of the main projects is based in Kenya: Konza Technology city. Located at a short distance from the capital, Nairobi, it will house a research campus, incubators and start-ups. Digital giants such as Google and IBM are already there. And other countries are following the same path, like Benin with its Sèmè City. Smart installations that will push Africa to the forefront of the international scene, and that will map out its future, between innovation and reality.

Continue our top story

Smart cities in Africa

Smart cities in Africa

23 October 2019
View More
Tech side Africa
Innovation

Tech side Africa

23 October 2019
View More