Africa plays a very limited role in the global automotive industry and many of its small national markets are mainly supplied by imports of used cars. However, with a rapidly expanding middle class, the market is growing rapidly. Closer integration could expand the market and attract both regional and foreign investment.
The automotive industry in the African continent in 2021 was valued at US$ 30.44 billion and predicted to grow to US$ 42.06 billion by 2027. South Africa and Morocco were the two largest exporters accounting for over 80% of exports. But the continent as a whole is a major net importer of vehicles and parts.
The paper explores the ample potential for Africa's automotive sector value-chain driven industrialisation under the African Continental Free Trade Area (AfCFTA). We also explore the policy regime and the need for an appropriate Rules of Origin policy, (external) tariff policy and regional industrial policy. We argue that appropriate Rules of Origin (RoO) for the automotive sector would deepen market integration at both regional and continental levels, boost intra-African trade while promoting regional and continent-wide value chains.
