Motoring Africa. Edward T. Hightower
automotive OEM (original equipment manufacturer) and supplier executives, strategic planners, and corporate development professionals
African heads of state, government leaders, and ministers of industry, trade, finance, infrastructure, energy, and education
Local African automobile dealers
Automotive industry associations around the world
International development and development financial institutions (DFIs) including the United Nations, World Bank, International Finance Corporation, African Development Bank, and China Africa Development Fund
University faculty and students of business schools, schools of international affairs, and schools of government and public policy
Persons with a general interest in emerging markets
Persons interested in sustainable manufacturing
Persons interested in investing in the future growth and success of Africa
Why it Matters
The African continent is currently experiencing a period of tremendous population growth and economic growth potential. India is following the economic miracle that China experienced over the last three decades, and the African continent has the potential to be the next economic miracle. According to the United Nations Economic Commission on Africa (ECA), the population of the African continent is expected to grow from approximately one billion people today to two billion by 2050.1 According to the global management consulting firm McKinsey & Company, the African continent is expected to have the world’s largest workforce by the year 2034.2 Ten million jobs per year need to be created to absorb this new workforce.
The creation and production of automobiles and other motor vehicles requires a sizable and skilled workforce. When done correctly, locally creating industries like automobile manufacturing on the African continent can lead to the development of many profitable businesses across many sectors, and the sustainable transformation of local economies. History has demonstrated the ability of industrialization to transform economies, stabilize nations, and improve lives. Compared to foreign aid, the impacts of industrialization have shown to be more sustainable and enduring in numerous cases around the world. It is also a global business enabler and imperative. Industrialization and localization of the production of products like motor vehicles can significantly improve efficiencies and reduce manufacturing costs, leading to higher margins, reduced risks, and more profitable business ventures.
Economic growth which is solely built on agriculture or mineral extraction is heavily dependent on global commodity prices, supply, and demand. Also, extractive industries are limited in their ability to create direct and indirect employment, and to raise wages and per capita GDP. The development and production of motor vehicles requires many people of various skill levels. In addition to assembly line workers on the factory floor, these jobs include product engineers, manufacturing process engineers, accountants, administrators, software developers and information technology professionals, machinists, electricians, plant maintenance technicians, and other skilled tradespeople. Automobile production also creates local jobs in automotive components manufacturing and transportation and logistics services, for both parts and finished vehicles. Together, automobile product development, manufacturing, and the parts supply chain have a leverage effect in creating jobs in the retail and services sectors in their local communities. Success in the motor vehicle production sector can lead to sustainable economic success in the region where it is located. “If you get an auto assembly plant, Walmart follows; if you get a Walmart, an auto assembly plant doesn’t follow,” said Ron Bloom, Senior Counselor to U.S. President Barack Obama for Manufacturing Policy.3 Entrepreneurship, jobs, and greater economic success typically leads to greater political stability of local governments and the development of robust institutions to serve the nation’s people. Industrialization is world changing.
Motor vehicles and the automobile industry have progressed significantly since the early days of Gottlieb Daimler, Karl Benz, and Henry Ford. Cars go faster, stop sooner, better protect their occupants in the event of a crash, pollute less, and continue to become more accessible to consumers of all income levels. Recent technology advancements and current trends point to more vehicles running on electricity vs. the internal combustion of fossil fuels; more consumers sharing vehicles and rides instead of everyone aspiring to own a car; and soon…the introduction of autonomous or driverless vehicles.
As relative newcomers to mass scale automobile production, African regions would have the opportunity to avoid many of the negative environmental impacts of automobile manufacturing, use, and disposal. Car production plants of today can now use less energy, operate almost completely on renewable energy, and generate less waste. Advanced manufacturing techniques such as 3D printing and advanced robotics contribute to higher productivity, reduced material waste, and lower costs. Developing nations have the opportunity to integrate these technologies at the outset of their industrialization journeys instead of retrofitting them down the line.
From a customer and consumer use standpoint, vehicle sharing solutions enable personal mobility while avoiding mass ownership of vehicles, reducing congestion in urban centers and cutting the number of high-polluting internal combustion engine vehicles on the road. Being forward thinking in the approaches to both manufacturing and delivering personal mobility will allow newly industrializing (and motorizing) nations in Africa to leapfrog outdated practices, and create new technical solutions that are environmentally sustainable and minimize the impact on the planet.
Recently there have been a number of writings in business news and world affairs publications about the progress and potential of the African continent. Several articles include the refrains “Africa is rising” or say that we are living in “the African century.” Other articles refer to the African countries with greatest promise as the "African Lions." These claims are supported by the recent improvements in economic metrics such as gross domestic product (GDP) growth, foreign direct investment (FDI) inflows, and average income levels. There has not been a more favorable period of news about Africa’s advancements in recent history. The positive state of current affairs is well documented, so I will not attempt to review it in detail in this book. I will instead focus on how we leverage this progress to create a sustainable automobile manufacturing industry and overall industrial development on the continent.
Motoring Africa: Sustainable Automotive Industrialization. Building Entrepreneurs, Creating Jobs, and Driving the World’s Next Economic Miracle, will review how nations in Asia and Latin America have successfully industrialized the auto sector in their countries and how their economies and people have benefited. After this exploration, this book will propose strategies and recommend approaches for creating similar successes on the African continent. While many of these lessons and strategies will be applicable to other industrial and consumer product manufacturing sectors, our vehicle for driving industrialization is automobile production…puns intended.
Introduction
Ghana 1994: Like Cuba for Japanese compact cars. “Do they build any cars here?”
How it All Started
The citizens of Cuba are well known for maintaining the late 1950s American sedans and convertibles that dot their roads. In the early 1960s, the island nation banned the import of foreign vehicles, leaving late '50s Fords, Oldsmobiles, Chevrolets, and Plymouths as the dominant era and brands of cars on the streets of Havana.
It had been over a decade since I had seen so many late '70s Datsun B210 sedans, Toyota Corona and Subaru DL wagons, and Mazda GLC sport hatchbacks. They all were here as taxis, driving down the crowded six-lane road past the massive Kaneshie market off Winneba Road in Accra, the capital city of Ghana. My taxi was a four-door Datsun B210 with the oil light on. A common practice among taxi drivers in Ghana to save fuel was for the driver to shut off the car’s engine every time he came to a stop at a red