Africa, like any other continent, has its own share of economic problems. However, this does mean that African economies are not making any progress. It is only that the process is slow when compared to other economies. Most African economies have not invested in the manufacturing industry, but they are making baby steps.What role is the automotive industry playing in Africa? What is its future?
To embrace industrialization, many African governments have adopted development policies in the bid to speed up economic growth of their respective countries. It is important to realize that these policies are sector specific. This is the case because economic growth is achievable through contributions from different sectors of the economy, be they public or private. In the discussion, which follows, we will unveil the contributions of automobile industry to the growth of most African economies.
Same as the other continents, different African countries are at different levels of economic growth, thanks to different economic models employed by these countries.
South Africa - Auto Industry Ups the Economy
The automobile industry in South Africa is a big contributor to the economy. Every year, Port Elizabeth handles close to one million cars for export. Not only does this country lead the automotive industry in Africa but it is the main supplier of auto parts in Africa and beyond.
Car manufacturing changes the figures of any economy and in SA, the industry is equivalent to more than 10 % of the country’s manufacturing sector. Auto making thus contributes up to or more than 7.5% of the country’s Gross Domestic Product (GDP).
Automotive industry is taking a more defined direction in Morocco and Kenya. Already, they are establishing assemblage plants of their own. Although this is yet to make any impact on the GDPs of the two countries, it is a very good start and soon, it will flourish. With the governments of the day realizing that there is more in auto manufacturing, they are creating ample avenues for the private sectors to venture into car production.
What will the establishment of the automotive industry in Africa do for Africa? There are so many benefits as you will see here. It is paramount that one know what they are:
- Boost the economy
- creation of employment
- Earn foreign exchange from car, trucks and parts exports
- Reduce reliance on foreign and donor aid as African countries have been doing
- Boost supportive industries in the country – For example, tire manufacturing, upholstery and many more
- Create a balanced import-export ratio and thus strengthen the African currencies
- Improve the transport industry in Africa
Thanks to the cooperation that Africa is getting from countries like Japan and China, they are making big footsteps in motor vehicle assemblage. Very soon, just as is witnessed in South Africa, Kenya, Morocco and other countries in the continent will make a big boom in the auto assemblage industries. With more countries becoming more established and politically stable, the future of the manufacturing and assemblage industries is very bright.
Different sectors of the economy rely on each other for growth and sustainability. This means that the survival of one sector is directly or indirectly dependent on the survival of the other. Therefore, the automobile industry in Africa has made indirect contributions in other sectors of the economy. For instance, most African countries depend on agriculture as their economic backbone, accounting for the highest percentage of Gross Domestic Product of these economies.
The agricultural sector cannot thrive on its own if there are no marginal contributions from other industries. For instance, heavy and light trucks are used in the transportation of farm inputs during the planting season and transportation of farm produce during harvesting. They are also used to transport fresh produce to the market, airports and the urban centers.
Simply said, the automotive industry in Africa needs to grow fast because it is the main determinant of how the other sectors of the economy perform. If it dwindles, others sectors will simply slump.