According to a World Economic Forum (WER) report, the African automotive market is valued at $30.44 billion, and it is expected to reach USD 42.06 billion, registering a CAGR of 5.55% over the next five years. Africa’s automotive market size is expected to grow from 1,325.89 thousand units in 2023 to 1,777.69 thousand units by 2028. The African automotive market is dominated by manufacturers such as Volkswagen AG, Toyota Motor Corporation, Groupe Renault (including Dacia Sales), Daimler AG, Ford Motor Company, Hyundai Motor Company, and Isuzu Motors. Manufacturers are focusing on various growth strategies, such as expansions, partnerships, product launches, and production capabilities, to hold a competitive edge in the market.

The African automotive market was most severely affected by the COVID-19 pandemic. The market is expected to reach the pre-COVID demand rates from customer industries only in mid-2023. The production facilities are expected to recover with a skewed production schedule, which may fluctuate based on demand.

Over the medium term, the African automotive market is expected to grow rapidly due to supportive government incentives and increasing urbanization in the major countries in the region, which are encouraging infrastructural developments, thus creating a positive outlook for the market. Several larger countries, such as Nigeria and Kenya, are also focusing on plans to develop domestic automotive production. For instance, Kenya’s National Automotive Policy aimed to increase the exports of automotive products to the East African region from 5% in 2018 to 15% by 2022. To achieve this, the government introduced incentive plans on locally assembled vehicles, aiming to replace imported vehicles with locally assembled ones. Such developments may boost the automotive market in Kenya.

However, increased competition from the used vehicle market and weak domestic vehicle production facilities, further compounded by constrained household finances (even with low-interest rates), are some major concerns for the automotive industry in the region. The government initiative for foreign investments in the automotive industry is expected to drive demand for this industry in the region during the next five years.

A recent study estimates that eight out of 10 imported cars in Ethiopia, Kenya, and Nigeria are second-hand cars. According to the Kenya National Bureau of Statistics (KNBS), the volume of imported vehicles between 2005 and 2017 grew by over 300%, from 33,000 to over 120,000 units. Governments are developing policies to limit the influx. To increase the price of second-hand cars to favor more new car purchases, Kenya has forbidden vehicles over eight years old from entering the country, with plans to reduce this further. Similarly, Nigeria has increased its import duty on second-hand vehicles, most arriving in a bustling trade from the US into Africa via Benin’s Cotonou port. 

Countries like South Africa, Nigeria, and Kenya are expected to experience positive growth due to the growing focus on improving local production and discouraging imports. For instance, in Nigeria, the National Automotive Industry Development Plan (NAIDP) imposed a 35% levy on automobile imports, over and above the 35% tariff already levied, for an effective total duty of 70%. The NAIDP also allows companies that manufacture or assemble cars in Nigeria to import one vehicle for every one manufactured in Nigeria. Nigeria slammed 70% import duty and levied on imported vehicles. This resulted in an increased volume of locally assembled and manufactured vehicles in the country, with most local companies seeing developments in their manufacturing processes and capacities. Nigeria has established a ten-year duty exemption and tax holiday for any original equipment manufacturer (OEM) that sets up a local assembly plant in Nigeria.

The growing presence of international automobile manufacturers and brands in the region and the consumer’s ability to purchase new cars and maintain those, coupled with the growing consumer’s interest in buying more than one passenger car to suit their daily needs and travel purposes, may improve the demand for cars across the region. For example, in 2021, African motorists purchased around 833,020 passenger cars, South Africa being the top passenger car destination.

With the growing focus on improved fuel economy and reduced exhaust emissions, the demand for and sales of electric vehicles, especially electric cars, is expected to grow fast during the forecast period. In August 2022, Audi South Africa finalized the installation of 33 electric vehicles (EV) charging stations across the country. These represent a total of 70 charge point connectors and expand on the existing network in the country. The chargers range from 22kW (AC) to 80kW (DC) and 150kW (DC) ultra-fast charging and are immediately available to all South African electric vehicle drivers, regardless of model or brand ownership.

Formed in 2015, the Africa Association of Automotive Manufacturers (AAAM) works specifically to promote and facilitate the growth of the African automotive industry. Formed by executives from the world’s biggest car manufacturers, the African Association of Automotive Manufacturers (AAAM) embarked on a concerted push to revive and resurrect Africa’s auto industry. Since then, the newly-created African Association of Automotive Manufacturers (AAAM) has been working with key African governments to create the right policy environment for the sector to Flourish.

The African market has one of the highest growth prospects in the world. Multinational vehicle manufacturers are setting up production plants in Angola, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Rwanda, South Africa, and other countries. These clearly indicate the potential to boost manufacturing for the automotive market in the region. The report titled ‘AfCFTA: A New Era for Global Business and Investment in Africa’ further indicates that Africa’s automotive sector is ripe for new and increased investments strengthened by the AfCFTA, as international companies have registered growth by partnering with African countries. AfCFTA is set to catalyze local production of Automotives and meet local demand. 

In the bargain, the pact provides a powerful case for new investors to move into the automotive sector and thus help drive and transform economies across the continent. Under the trade pact, African automotive manufacturers will benefit from all the advantages of economies of scale, such as reduced tariffs across the continent for inputs such as rubber from Cote d’Ivoire and aluminium from Mozambique.

E-Mobility in Africa

The fight against climate change has led to the rise of sustainable mobility. Thus, countries must harness renewable energy and increase the demand for Electric Vehicles (EVs). Some of Africa’s main trading partners have banned internal combustion engine vehicle sales by 2035. Already, there are pilot projects for sustainable vehicles in Rwanda, South Africa, and Egypt. Furthermore, E-mobility startups have emerged across the continent. 

According to government projections, there will be about 6,000 electric automobiles in SA in 2020 (both fully electric and hybrid). The country is also exploring the possibility of manufacturing EVs, with the first fully manufactured EV expected to be ready by 2026, according to the trade minister. Naamsa (the National Association of Automobile Manufacturers of South Africa) expects at least 8 new EV products to be introduced in the country in 2024.

Morocco’s EV fleet included more than 10,000 hybrid vehicles in 2022, according to ‘Société Nationale des Autoroutes du Maroc’, Morocco’s national authority for the management of expressways. Like South Africa, Morocco boasts a vibrant vehicle manufacturing industry, including world-renowned car makers such as Renault and Stellantis. The country is targeting the production of 1 million cars of all types by 2025. Part of the plan is to have EVs represent up to 60% of car exports by 2030. Ongoing investments in battery manufacturing could expedite these ambitions.

Statistics by the Energy and Petroleum Regulatory Authority released in April 2024 show the number of EV registrations stood at 3753 as of 2023. Between July and December 2023, 2694 new EVs were registered, thanks to wide-ranging incentives implemented last year. While the number of fully electric four-wheelers is still low (less than 500), according to Afema, increasing investor activity by companies such as BasiGo and Roam promises to increase the numbers. Kenya recently unveiled its first Electric Mobility (e-mobility) Draft Policy, which outlines policy guidelines in the sector as it pursues a target of having 5% of all vehicle registrations in the country be electric by 2025.

Tanzania has grown into one of the biggest electric vehicle markets in Africa, with electric two- and three-wheelers being the dominant category on the country’s roads. A 2023 report by the Africa emobility alliance estimated the number of EVs in Tanzania at 5000 vehicles. While the number of electric four-wheelers remains low, there are still a few recent entries from major dealers, including the Tesla Model S, Renault Zoe, Nissan Leaf, and BMW i3.

Angola has one of the highest numbers of electric four-wheelers in Africa, with estimates by the Africa Emobility Alliance showing up to 1000 electric four-wheelers. Policies introduced in 2022 offer import and vehicle tax reductions until 2032. The country is developing a strategic plan for electro-mobility to accelerate growth in the sector. A 2023 report by CVE Angola, an EV company, shows an additional two thousand EV imports from the United States in 2024.

According to government data, approximately 17,000 electric vehicles, including 2 and 3-wheelers, are currently registered in the country. Ghana also boasts one of the largest EV four-wheeler fleets in Africa, with about 1,000 tracked in the Africa e-mobility alliance’s 2023 report. In the 2023/24 Budget Speech, the Minister for Finance and Economic Planning unveiled Ghana’s ambitious strategy to boost the EV sector. This includes waiving import duties on EVs for 8 years, starting in 2024. This initiative also includes exemptions on import duties for semi-knocked down and completely knocked down EVs imported by registered assembly companies and an extension of VAT exemptions on locally assembled vehicles for 2 more years.

In 2022, UNEP reported nearly 900 electric vehicles, including motorcycles and three-wheelers, zipping around Rwanda. That number is on the rise, driven by supportive government policies fueling a boom in EV-related businesses. Notably, Tesla has entered the Rwandan scene with its Model Y, joining players like BYD from China. The arrival of Kenyan startup BasiGo further underscores Rwanda’s commitment to electrifying transportation. Afema notes that Rwanda currently boasts 1,182 two and three-wheelers.

Multiple estimates from industry professionals suggest there were between 3500 and 4000 EVs in Egypt in 2023, almost double the 1,000 to 1,800 in 2021. According to Afema, the number of four-wheeler EVs is still modest, estimated at about 380 as of 2023. 155 of these were electric buses deployed when the country hosted COP 27. The government has an ambitious plan to encourage local EV production, with up to 100,000 units targeted in a few years. To meet this, the government plans to cover up to 35% of the costs per unit of EV produced locally to encourage the local industry.

According to estimates from Cleantechnica.com, as of 2023, there were some 5,000 to 7,000 electric vehicles on the roads of Ethiopia, with the sector experiencing significant growth thanks to government incentives. The incentives include VAT, surtax, and excise tax exemptions for all EVs and customs duty tax exemptions for completely knocked-down kits. The Ministry of Transport and Logistics aims to import a minimum of 4,800 electric buses and 148,000 electric automobiles over the next decade, part of a plan to accelerate EV adoption in the country.

Africa boasts key raw materials for modern vehicles that require new technologies to reach net zero. They include copper, cobalt, bauxite and lithium. In addition, there is also a huge market for electric motorcycles in Africa, especially in West, East and North Africa. This widens opportunities for utilizing domestically produced inputs in new markets by leveraging AfCFTA preferences.

In 2023 there was a slight decline in the infrastructure investment funds allocated to Africa, save North Africa, according to a report by the World Bank. This fall is specific to private investors’ handling of private infrastructure investments. The report revealed that “In 2023, SSA saw investments in 66 projects totaling $3.5 billion. This marked a 24 percent decrease from the investment levels of the previous year and a 46 percent decrease from the past five-year average. The largest contributor to the region’s PPI was South Africa, responsible for 30 percent of the regional PPI, followed by Senegal and Tanzania.”

Regionally, Africa will become a major player in global construction over the next four years. There will be a steady acceleration in construction activity in Nigeria’s efforts (4.6% CAGR) to revitalize the economy by focusing on developing the country’s infrastructure. However, Ethiopia (12.7% CAGR) will be Africa’s best performer. Its construction industry will continue to grow (albeit from a lower base than some of the continent’s other leading countries) in line with the country’s economic expansion.

This rapid pace of growth is driven by both public sector spending on infrastructure development projects and private investment in residential housing units as well as commercial buildings such as shopping malls with retail outlets. Energy, power, and transport projects have consistently been key contributors to the sectoral mix of projects underway. The real estate sector – predominantly commercial – has emerged as a critical sector in recent years. With population increase and urbanization in Africa, the strong growth of the construction sector is inevitable. However, many crucial challenges remain, like financing, available electrical grids, transportation, procurement, and skilled employees.

Demand for green cement in Africa will provide an increasingly lucrative market over the next few years due to growing trends in sustainability and energy efficiency for both buildings and infrastructure. The coming years will witness increased demand from local African marketplaces for more sustainable products in the local built environment.

Currently, Kenya’s construction industry is going through a boom. The government has invested heavily in the construction sector of Kenya to improve the infrastructure, such as road networks, and at the same time, provide new residencies for the locals (who are being supported by the banks to get a loan to buy apartments/cars). According to the Kenya National Bureau of Statistics, the real estate and construction sectors have continued to be key drivers of economic growth in Kenya for the last five years. The Kenyan construction industry contributes 7% of the gross domestic product (GDP), which makes it clear that Kenya has a well-developed construction industry. With the increased population, opportunities exist in constructing residential, commercial, and industrial buildings, including prefabricated low-cost housing.

Infrastructure development is a central pillar of Kenya’s Vision 2030, and in 2015 the $3 billion construction sector contributed 4.8% to the Kenyan economy. Kenya Vision 2030 overall goal for the construction sector is to increase its contribution to GDP by at least 10% per annum and propel Kenya toward becoming Africa’s industrial hub. The Economic Survey 2016 published by the Kenyan National Bureau of Statistics (KNBS) reported that approximately 148,000 people are formally employed in the domestic building and construction industry. Players in the sector range from indigenous micro-enterprises to foreign multinational civil engineering and construction giants. Although building and construction contractors must be registered with the National Construction Authority (NCA), many unregistered contractors operate in the informal sector.

Nigeria is often highlighted as one of the most attractive markets in Africa for construction works. Of the nearly $120bn committed to infrastructure spending across 92 projects in West Africa, 61% is earmarked for plans in Nigeria. The country currently has over 68 major building projects with a total capital expenditure of over $73 billion, second only to South Africa on the entire African continent. Given the size of the Nigerian economy and the traditional spending of other African states, these figures mask a historical underspend in gross fixed capital formation (GFCF), a category that includes infrastructure projects and land improvements. An average GFCF of 30% of GDP is optimal for creating a growth-conducive environment. In recent years Nigeria has spent just 11.9% of its GDP compared to a sub-Saharan Africa average of 21.5%. The continental leader Ethiopia spent an average of 32.8% of its GDP on infrastructure over the last decade.

The South African construction market was valued at $29 billion in 2021 and is expected to achieve an AAGR of more than 2% from 2023-2026. During the forecast period, the growth will be supported by investment in transport, electricity, water, sewage, and housing infrastructure projects. The key sectors in the South African construction market are commercial, industrial, infrastructure, energy & utilities, institutional, and residential constructions. The infrastructure construction was the largest sector in South Africa’s construction industry in 2021. The leading contractors in the South African construction market are Wilson Bayly Holmes-Ovcon Ltd, Stefanutti Stocks Holdings Ltd, Basil Read Pty Ltd, Roshcon, and Balwin Properties Ltd, among others. Wilson Bayly Holmes-Ovcon Ltd has the highest project value in the South African construction market. The leading consultants in the South African construction market are iX Engineers Pty Ltd, Incico SpA, Amandla Engineering Pty Ltd, SRK Consulting (Global) Ltd, and GIBB (Pty) Ltd. iX Engineers Pty Ltd has the highest project value in South African construction market.

As a region, East Africa had the largest number of recorded projects, with 139 projects between 2018 and 2019. North Africa accounted for the largest share of projects in terms of value at 31.5% (US$148.3bn). The projects included were spread over 43 of Africa’s 54 countries. Egypt was the single country with the most projects, with 46 projects (9.5% of projects on the continent) and the most projects by value at US$79.2bn (17% of the continent’s value), edging out South Africa and Nigeria, respectively. The Transport construction sector had 186 projects (22.7% of the total project value), followed by power and energy projects (with a share of 24.4% of the total project value).

The construction industry employs many people, and each year, billions of dollars are invested in it through government funding, consortiums, and private investors. The African construction industry is the target destination for most large economies because of accruing benefits, such as the availability of natural resources, huge investment opportunities in energy and infrastructure, cheap labor, and a fast-growing consumer market. Africa also has a beneficial business environment that includes favorable economic development policies, rising commodity prices, continued progress in the fight against corruption, and adoption of democratic governments.