Business Insider Africa obtained a recent report by Fitch Solutions which says, in parts, that Sub-Saharan Africa is "the least attractive region globally in our Autos Production Risk/Reward Index (RRI), with a score of 38.4 out of a possible 100. The region continues to significantly underperform the global average of 50.0, which highlights the limited rewards and extensive risks present in the region."
These 4 countries are the biggest car manufacturers in Sub-Saharan Africa
Although Sub-Saharan Africa is the least performing region in the world as far as car manufacturing is concerned, it still has some good fundamentals/potentials.
Opibus Manufacturing Plant in Kenya
Recommended articles
But the report identified two favourable fundamentals that present an opportunity for the region to grow its autos industry and become a strong manufacturer in the long run. The fundamentals are: low labour cost and supportive automotive policies by governments.
Below are the key features of SSA's autos industry, according to the latest update by Fitch
- The region retains its position as the least attractive region globally in our Autos Production Risk/Reward Index (RRI), with a score of 38.4 out of a possible 100.
- The SSA region underperforms under both the Risks (28.8) and Rewards (47.7) pillars of our RRI. This indicates that the region's extensive risks present automakers and component manufacturers alike with a tough operating environment.
- The SSA region outperforms the global average score of 50.0 under our 'vehicle production growth' indicator with a score of 80.4, indicating favourable prospects for growth going forward.
- On the Risk side, the SSA region scores below the global average under the logistics risk and operational risk index categories, scoring 20.1 and 14.7 respectively, which is well below the global averages of 50.0.
ADVERTISEMENT
In the meantime, listed below are Sub-Saharan Africa's leading vehicle producers
- South Africa: This country currently has the most developed autos industry in Sub-Saharan Africa and remains the most attractive market. The country has a more diversified set of vehicle manufacturers, as well as a larger number of automotive component makers. Other factors such as the country's positive autos policies and a favourable competitive landscape have contributed to South Africa's growing autos industry.
- Nigeria: Coming in second place is Nigeria, Africa's largest economy by GDP. According to Fitch Solutions, "Nigeria's large driving-age population remains a key appeal for further investment into the country".
- Kenya: Growth in Kenya's autos industry is being driven by the country's conduive autos industry policy and a combination of low-cost and abundant labour.
- Ethiopia: The Horn of Africa country made it to the last position on this list. Unfortunately, the ongoing war in the country is hampering the potentials of Ethiopia's autos industry, Fitch Solutions said.
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: news@pulselive.co.ke
Next story