The economic opportunity for manufacturing electric vehicles in Africa is immense. Unlike in the global North where electric vehicle adoption was top-down, driven by governments through regulation and fiscal incentives. In Africa, the phenomenal rise in fuel prices (>300% in 2023 in Ghana and Nigeria alone) has created the perfect storm driving grassroots demand for a transition to sustainable mobility. In fact, I strongly believe that the continent is well-positioned to leapfrog Western nations in its adoption of EVs, just like we saw with the adoption of mobile phones and that of mobile money, this feels like the next frontier.
The current state of the automotive industry on the continent leaves a lot to be desired. Africa has become the dumping ground for 40% of global used vehicles, and 80% of these do not meet basic emission standards and roadworthiness. We have seen a boom in the last 24 months in the number of electric mobility companies springing up on the continent. Testing business models for the distribution of electric bikes, motorcycles, trikes, cars, swap stations, and charging networks; you name it the rapid pace of adoption is no longer being questioned. I strongly believe that in the next 10 years, every vehicle on the continent will go electric. However, I am also conscious that we have to be mindful and deliberate as to how this transition should come to fruition. What we do not want is once again to make the mistakes of old; and to build our automotive industry with a 100% dependence on low-quality foreign imports, denominated in dollars.
For ICE vehicles as African consumers, we became so accustomed to making purchasing decisions based on the perceived "brand superiority" of Western cars that as a result, over the years, we chose to import accident cars that came from 100-year-old brands rather than invest in our own vehicle industries. With the new frontier of EVs, global leaders of Tesla, BYD, and Catyl are at most a 20years old. So what honestly is stopping us from investing in the RnD to build our own and localise as much of our value chain as possible? Even if it takes 10 to 15 years, is it not a better option for our economies and our environments to locally innovate and co-create with the world, rather than blindly copy and import low-quality or used vehicles at premium prices? We need to say no to what I like to call it "buying and selling tomatoes" this is our time to make the right investment and regulatory policies to position ourselves as innovators and product makers rather than just price takers.
I acknowledge that its not easy or an overnight transition, but we need to start somewhere. I believe that our starting point needs to be with us as Africans. Building and strengthening our local capability to design EVs that suit the behaviours of our people, the realities of our roads, infrastructure, and our financial capabilities. From here we move to establishing quality international supply chain partnerships to drive the availability of electric vehicles whilst along side investing in RnD and local sourcing practices to facilitate a transition to localisation of our component production over a targetted duration. The continent is also home to most of natural resources, such as lithium, cobalt, and copper, which are essential for the production of EVs. Additionally, the cost of labor in Africa is relatively low and highly skilled, proving conducive conditions for EV manufacturers.
In order to do this we need a radical change in approach by four key actors entrepreneurs, regulators, academia and investors;
To my African entrepreneurs; we are currently being pigeon-holed into creating start-ups that have purely digital platforms targeting rapid scale of subscribers. Although in many cases these are exciting and much-needed business models. Sometimes we gravitate towards these businesses as we believe that they are attractive to investors and have therefore developed a fear of capex-intensive ventures that can potentially drive more value to African consumers. I challenge you, that at our stage of economic development where everything from toothpicks to toilet rolls is imported, we must not ignore our need for hardware and value addition creating physical goods. It may be daunting in the beginning but with the right funding and technical assistance, it is more than doable. And will open the opportunity to establish resilient legacy businesses, that have the potential to be significant job creators for Africa's youth.
To my African Governments and Regulators; this is your window to write policies to create an enabling environment for innovation not just assembly. We need policies to incentivise pioneers to invest in automotive RnD. We need to establish a clear regulatory path for the design, distribution, and trade of new "made in Ghana" climate-smart innovations. We need to establish fiscal incentives to scale in our own markets, as well as protectionist measures to incubate local businesses enabling them to compete. We need to adopt preferential procurement terms in order to provide offtake to local innovations now and into the future. We need to digitise processes in order to reduce the time and cost it takes to do business both within our borders and across our continent.
To Venture Capitalists and Financial Institutions; Africa is not as risky as you price. Pioneers need to plan for resilience and this often costs more to setup right in the beginning but you reap the benefits in the long term. Smaller tickets that push incremental proof points of traction are becoming a distraction and I fear may divert the continent from making its critical next step of sustainable industrialisation. What we need are investments in industrial enclaves that empower entrepreneurs to manufacture for our futures. What we need are bigger tickets as seed rounds being invested in women to drive our meaningful participation in our growth, not just mentorship which is often focused on empowering us as individuals rather than supporting us to build systems that transcend us. We need traditional commercial banks to diversify their portfolios, reduce their interest rates, remove draconian rules around collateral and commit to investing in blended capital, financing climate-smart initiatives that unlock potential rather than become an anchor to commerce.
And finally, to African Academia and Talent Building Institutions; we need to educate for innovation. Adapting syllabuses that ignite new thought leadership, train Africa's youth on technical tools and skills that ensure they metamorph into a productive workforce. Be meaningful about partnering with the automotive and manufacturing companies in Africa and globally to solve real industry problems and stay at the cutting edge of technological advancement.
We are at an exciting inflection point in our economic history. We need to take a moment to pause, reflect, and redefine what good looks like for African mobility, economic growth, and sustainability and collectively take arms against a sea of troubles to realise the Africa our generation desires.