AfCFTA, WEF forecasts 4-5 million production of EVs in Africa by 2035; benefit from $7.7trn EV market value

A joint report by the African Continental Free Trade Area Secretariat and the World Economic Forum (WEF) reveals that the electric vehicle (EV) market is emerging as a focal point for the continent. With the global EV market projected to reach $7.7 trillion by 2025 and a staggering $46 trillion by 2050, Africa, possessing 19% of the world’s critical minerals and metals essential for EV production, stands poised for substantial participation.

Despite electric vehicles currently representing a modest share of Africa’s automotive production and sales, rising demand is evident. The implementation of bans on internal combustion engine vehicles by some of the continent’s major trading partners, effective as early as 2035, has further fueled this momentum.

The report underscores the accelerating growth of the automotive industry in Africa catalyzed by the African Continental Free Trade Area (AfCFTA). The AfCFTA, coupled with global trends, is seen as a catalyst for expanding opportunities, potentially involving more countries in the automotive value chain. Recognizing this potential, the World Economic Forum is actively collaborating with partners to achieve the ambitious target of manufacturing 4-5 million vehicles by 2035. This initiative also aims to foster the proliferation of manufacturing plants across the continent, reinforcing the commitment to local value addition.

In alignment with the broader trajectory, the report forecasts substantial growth in the African automobile industry, projecting it to surpass $42 billion by 2027. As the continent positions itself to capitalize on the EV surge, Africa’s aspiration to become a key player in global EV production reflects a strategic alignment with both regional and international trends.

Africa The report presents initiatives from the WEF partners to maximize the opportunities of a new free trade area across Africa in the four key sectors of agriculture, transport, automotive and pharmaceuticals.

The African Continental Free Trade Area (AfCFTA) offers the opportunity to unify the small, fragmented markets of 55 separate African states into a single market that, by 2030, would represent 1.7 billion people and $6.7 trillion in consumer and business spending.

If the AfCFTA agreement is fully implemented, it could increase real incomes by 7% or nearly $450 billion. Officially launched in 2021, the AfCFTA could also increase intra-African exports by 81%, providing the opportunity to lift 30 million people from extreme poverty by 2035, according to the World Bank.

By removing barriers to trade, the AfCFTA offers opportunities for the private sector to develop local and regional value chains across the continent. However, the potential benefits to African countries will only be realized if governments eliminate tariff and non-tariff barriers to trade which will incentivize businesses to utilize the agreement.