Investment, Sustainability, Decent Jobs: Challenges and Promises for the Sub Saharan African Auto Industry

In a comparative research recently conducted for IndustriALL Global Union/ FES South Africa, we[1] tried to shed light on the high potential of the automotive industry in Sub Saharan Africa. At the same time, we explored the key challenges and pressing issues that need to be addressed for a sustainable industrial development path in the region. Our research report focuses on seven countries, identified as promising, fast-growing or broadly committed to supporting their Auto sector: Ghana, Kenya, Ethiopia, Namibia, Nigeria, Rwanda and South Africa.

First and foremost, the report claims attention towards these economies, and industries,  that are still largely underexplored, that still enjoy very limited visibility, whereas the largest portion of research on industrial development and on the Automobile industry is often addressed to traditionally established industries in the Global North (Europe, US, Japan) or to emerging giants in the Global South (China, Mexico, Brazil etc.). Our objective was thus to emphasise the increasingly important role that these seven industries, and the Sub Saharan African region more broadly, can play within the Global Auto Industry. Despite structural weaknesses that do persist, and despite the heavy impact of the Covid-19 pandemic, these seven countries share a willingness to own their industrial development trajectory, and to widen their participation in Global Production Chains. In this regard, the local auto industry remains an important bet.

While still facing significant structural issues (poor infrastructure, financial instability, high inequalities, among others) all these countries do own resources, capabilities and skills, and show high potential for growth and development. In addition, they all revealed – to different degrees, the intention to formulate targeted Industrial Policies that might support the growth of the sector and its international integration. The Ghana Automotive Development Policy (GADP) in Ghana, the National Automotive Policy (NAP) in Kenya, the Nigerian Automotive Industry Development Plan (NAIDP) in Nigeria and the current South African Auto Masterplan (SAAM) in South Africa are some examples. Meanwhile, several of these countries have established agreements with world-leading auto companies: Kenya, Rwanda, Ethiopia, Ghana and Nigeria signed MoUs with Volkswagen, Toyota, Nissan, BMW and other big auto firms to set up vehicle assembly facilities, assess new mobility concepts and launch training centres for production and after sales. Ethiopia and Rwanda are also exploring the electrification route in order to promote greener mobility. Overall, steps are being taken, investments were recently promised or are already under way, in spite of the slowdown imposed by the Covid-19 pandemic.

Through the report, what our research voiced was a claim from these countries, for more and sustainable investments towards their auto industries. We thus tried to collectively make sense of what sustainability should mean, and the answers were clear. All country representatives agreed that sustainability should involve continuity of investment, environmental sustainability, local development opportunities and shared social benefits. Most importantly though, sustainable investments should be linked to the creation of employment, and of decent, quality jobs. The need to address widespread unemployment rates and the lack of decent jobs came up as crucial, and compelling. Indeed, issues related to precarity and vulnerability emerged across the board. In Ghana, for example, over 76% of the workforce is engaged in vulnerable employment; in Ethiopia, Namibia and Rwanda, poverty wages are the norm and minimum wages are not fixed; in Ethiopia, workers’ rights were reportedly suspended during the Covid-19 pandemic; in Kenya, informal jobs dominate the industry and short-term, even piece-rate agreements are common; race and gender divides persist in the Namibian and South African industries; strong anti-union behaviours are frequent in Namibia and Nigeria; in Nigeria, informalisation, casualisation and outsourcing are leading to a severe deterioration of working conditions in the industry.

Overall, the report is a call from these seven countries. It is a call to claim attention towards the increasing role their industries can play within the Global Auto Chain. It is a call to show the commitment to industrialise by taking ownership on the development process. It is a call for investments, and for these to be sustainable, i.e. directly linked to local development and to the creation of more and decent jobs. It is a call to highlight what is currently not decent – what is poor, vulnerable, insecure in their labour markets and within their industrial workforce. It is also a call from unions and for unions, to build transnational networks, to strongly counter processes of labour casualisation and informalisation, and to keep a vigilant eye on the impact of Covid-19 on already vulnerable workforces. It is a call to organise – more, wider, better.

Lorenza Monaco is a Researcher at GERPISA/ENS Paris Saclay and a Senior Research Associate at the University of Johannesburg.

See here for the full report and a shorter pamphlet.

[1] Collective research conducted by a working group composed by: Lorenza Monaco (lead researcher), Kwabena Nyarko Otoo (Ghana), Sisay Tulu (Ethiopia), Paul Omondi (Kenya), Michael Uusiku Akuupa, Kudzai Chireka, Sophia Isala (Namibia), Ismail Bello, Lai Brown (Nigeria), Remy Ruberambuga (Rwanda), Mario Jacobs, Shane Godfrey (South Africa).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s