Driving for a cleaner future: Delegates at the Inter Africa Trade Fair, which took place in Cairo, Egypt, recently.
There’s no denying free trade pushes towards economic development across countries while promoting innovation and helping them provide the lowest possible prices for their resources. This, in return, allows manufacturers to provide lower prices for finished goods, thus increasing the buying power for customers across the continent. In theory, it’s a win-win situation.
The Intra-African Trade Fair (IATF), launched in 2018, is a biennial event that serves as a conduit for exchanging trade, investment and market information. This fair is a prime example of platforms that enable buyers, vendors, investors and country representatives to meet, discuss and conclude business agreements.
This year, the IATF took place in the Egyptian capital Cairo, where a wide range of participants, from state officials, continental players in multiple sectors and business exhibitors to entrepreneurs, investors, buyers, trade visitors and the media were in attendance
With more than 35 000 visitors, the fair attracted 75 African countries and 1 600 business exhibitors from across the continent.
Sessions were held over a seven-day programme, including the automotive forum where subjects such as the powertrain evolution in Africa; the automotive sector under the AfCFTA (African Continental Free Trade Area); driving demand; and used and grey vehicle imports were discussed.
Speaking of the powertrain evolution in Africa, the entire world is going electric as vehicle manufacturers push towards the common goal of zero emissions and one issue that came up time and again during the forum was the readiness of the continent for electric vehicles.
The truth of the matter is that African countries need to overcome a host of problems before they can move to electric vehicles
For South Africa, at least, hybrids are a better option for now, due to their ability to run on combustion engines and electric motors.
Experts in the automotive industry discussed the issue of electric vehicles at the forum and some recommendations were made. According to Volkswagen SA managing director and African Association of Automotive Manufacturers(AAAM) president, Martina Biene, battery electric vehicles are not a silver bullet, and each segment needs to be evaluated separately.
Biene said that they are a great fit for passenger cars and bikes, even though they may not be suitable for commercial vehicles.
She emphasised the importance of support for accelerating the transition to electric vehicles, including financing, local production and incentives for widespread adoption.
Another issue regarding electric vehicles in Africa is how the continent is way behind Europe when it comes to emission levels.
For example, many African countries are still operating under standards equivalent to the Euro 2 standard or lower, which means these cars contribute more to air pollution and climate change compared to those that are made according to more modern and stringent standards in other parts of the world.
The South African car market is still operating on the Euro 2 standard, which makes it difficult for manufacturers such as Volkswagen to introduce hybrid vehicles because the system isn’t designed to run on contaminated fuel.
About 80% of our energy comes from coal and that means we contribute almost 20% towards an emission-free future, so the transition towards a sustainable future must be exercised soon by keeping pace with what we have such as hydro, wind, solar and nuclear power.
By 2027, the African automotive industry is expected to grow by almost 40% to reach $42.06 billion under the AfCFTA agreement. To support this growth, extensive consultations have been held between the AfCFTA secretariat, Afreximbank and the African Association of Automotive Manufacturers (AAAM) to strategise the manufacturing of vehicles in Africa.
Afreximbank has committed a $1 billion facility to support the initiative and funding is available for any investor that seeks to pursue local content development in the automotive value chain.
The panellists discussed a multi-faceted approach to driving demand in Africa, including investing in renewable sources of energy.
This investment could stimulate the use of electric vehicles while stabilising inconsistent power systems.
Another factor pushing towards electric vehicle adoption is the possibility of government subsidies.
In South Africa, the GWM Ora is considered the most affordable electric car, with a price tag of R686 950.
African countries can also look at initiating climate programmes, local production of electric cars and emission reduction targets which will speed up the phasing out of internal-combustion engine powered cars.
The Egyptian government has plans to start building electric vehicles in the country in the coming years, which should help to bring down the price on the continent.
At the same time, African countries can reduce traffic congestion and lower pollution by implementing ride-sharing platforms.
While used and grey imports might offer affordability, they present a challenge to local automotive sectors as they may not adhere to the same safety and emissions standards that govern domestic production.
Grey imports can also result in financial losses for governments due to the underpayment of import-related taxes and VAT.
Therefore, the AAAM is urging public regulators to step in and protect African markets from the surge of illegally imported used vehicles, which, in turn, will help safeguard the environment and road users.
The AfCFTA expects to attract investors from around the world and boost trade by allowing goods to flow freely through African countries, providing better jobs, and reducing poverty.
The IATF was humming with deals and partnerships being formed and we believe this dream is becoming a reality.