Authored by: Frank Jacobs (Source: GlobalFleet)
Africa is home to 1.2 billion people today, or about 17% of the world’s population. By 2050, the UN estimates there will be 2.5 billion Africans (25% of the global total). By century’s end, there could be 4.5 billion Africans, representing 40% of humanity. Meanwhile, the continent is shaking off its reputation as the place of constant conflict and misery. Governance is improving and the economy is developing fast – in some countries, at least.
All of which points to a future in which Africa will become less of an afterthought in the considerations of global fleet managers. The first step towards better understanding Africa is realising that it is not a single place, but – like Europe, Asia and Africa – a huge continent that defies quick and easy definition.
And one that lacks transcontinental transport infrastructure. For example, there is no single road that cuts conveniently east to west across Africa. If you want to move goods from, say, Kenya to Nigeria, you’d have to go all the way down to South Africa and then up again. That can take six weeks.
When it comes to OEM preferences, there are marked (yet not absolute) regional differences. East Africa is strongly influenced by the Middle East when it comes to the new- and used-vehicle markets. North Africa is under strong European – mainly French – influence, while West Africa demonstrates its relative proximity to the US. South Africa has a more European feel, thanks to a significant manufacturing presence by some European OEMs. Oh, and Toyota is everywhere.
“There are some 42 million cars on the road in Africa, with vehicle ownership varying considerably between the various regions. In sub-Saharan Africa, it’s just 2%, versus 70% in the US and 50% in Europe”, says Andy Sacha, formerly Global Fleet Manager at Nestlé, now an independent consultant (carfleet.guru), with wide experience in the region.
But that 2 % isn’t evenly spread: if there’s anything that defines Africa, it’s the huge divergence between markets, says Mr Sacha: “There are some developed countries that are similar to Europe, for example, South Africa, Egypt, Morocco and (in the wider Middle East) Israel. And then on the other end, you have extremely undeveloped countries like Mali or Congo.”
“So just by this fact, you can see that fleet and mobility development is very polarised across Africa. Also, when we talk about mobility, this is still the classic mobility: planes, trains and automobiles – plus scooters. None of your fancy mobility cards in Africa! And certainly no EVs, at least not in 99% of the continent.”
Xavier Gonzalez, Global Procurement Manager at British American Tobacco, confirms this view: “Some countries – Morocco, South Africa for example – have a higher level of fleet and mobility maturity, but the average across Africa is very low. In some markets, Algeria for example, access to vehicles is limited. That’s why in this region, we at BAT own our vehicles. Only in the more developed countries, like South Africa, do we lease them.”
More specifically, Mr Gonzalez sees three types of problems that impact on fleet management across Africa (and the Middle East):
- “Firstly, lack of OEM availability. There are barely any European or American manufacturers present in Africa; however, there is a significant presence of Asian manufacturers, notably Toyota.”
- “Secondly, we have to consider Africa’s environmental specifics, such as extreme weather conditions, and roads which can be in very bad repair. This dramatically reduces vehicle choices. We are obliged to choose ‘tropicalised’ vehicles. That in turn impacts on the way the fleet is managed: cars must be tough and mechanically simple, so they can be repaired anywhere.”
- “And finally, there isn’t an NCAP safety assessment standard in the countries of Africa or the Middle East for that matter. For companies like ours, that operate with global standards, that obliges us to adapt global standards to regional – and even local – requirements.”
South Africa – and North African countries like Morocco, Algeria, Tunisia and Egypt – is where international leasing players (either directly or via partnerships) offer ‘classic’ services, such as operational leasing.
South Africa also boasts some strong local players, which are not only able to provide these lease services domestically, but also extend them to other close-by and/or fairly-developed countries, including Namibia, Ghana and Nigeria.
“East Africa is mainly managed through local dealers,” says Mr Sacha. “Some of the larger ones are able to provide financial leasing. However, none of the major leasing companies operate in this area, nor do local banks offer leasing services, and there are no local lease companies. So there are no lease markets in East Africa.”
And that’s a bit strange. Aren’t East African economies like Kenya, Uganda, Rwanda and Tanzania supposed to Africa’s booming, high-tech avant-garde? The peculiar combination of lack of traditional infrastructure and high penetration of mobile phones has made the region a world-leader in innovative technological solutions, notably for micropayments (agriculture, but also gambling).
“This hasn’t yet translated to fleet, because that’s a high-value investment, and local banks are quite risk-averse and conservative when it comes to lending,” says Mr Sacha. “However, a mobile solution would be ideal for a car-sharing solution like Zipcar, where you rent a car by the hour. The issue would be how to validate the drivers (and their licenses). Plus, road conditions are dreadful – even in major cities like Nairobi or Kampala. Small cars would struggle.”
Bad roads translate into high maintenance costs and ultimately high rental costs. That would put this solution beyond the means of the average user. Instead, places like Nairobi have a well-developed system of informal communal transport, via minibuses and scooters – but also individual solutions like Uber (and local variants).
“I see the need for mobility developing in East Africa, where the urban population is large and the middle classes are growing”, says Mr Sacha. “The question is: will they bypass the car and go straight for mobility solutions, or will they follow the classic approach – a car for everyone – but just much faster?” Not an option: public transport to meet the mobility demands in the major cities. “The governments are too cash-strapped.”
“Fleet maturity is patchy and varies from zero to full maturity – but again, only for classic mobility solutions like operational leasing or vehicle purchase,” adds Mr Sacha. “On the mature side, you have South Africa, Morocco, Algeria, Israel and Egypt; on the immature side, there’s DR Congo, Mali, Rwanda and Liberia, among others. All the others are somewhere in between.”
The road to fleet maturity is often seen through the lens of North America and Western Europe – i.e. those regions that achieved maturity first. But that is not necessarily the road Africa will take. ‘Mature’ schemes using mobility budgets and electric powertrains still seem very far away, even in the more developed African markets. Shared mobility schemes are problematic, considering the high risk of vehicle theft and hijackings.
“The European model is not necessarily the most suitable for Africa,” according to Mr Sacha. “Africa has the advantage that there is no historical baggage, and their needs are very different from those in the Northern Hemisphere. So ‘African-style’ fleet maturity will be Nigerian or South African, rather than American or European.”
“I don’t see these markets evolve to levels comparable to North America or Europe today – at least not in the next five to 10 years,” Mr Gonzalez opines. “That’s not to say they won’t get there in the end, but we’re talking such a long time that Europe and North America will have moved on from where they are now. Long story short, for the foreseeable future, dealing with Africa will mean dealing with a serious delay in fleet maturity.”
That delay in maturity will remain a challenge, but in the best possible sense: global fleet managers with African responsibilities will have to be innovative and adaptable, as they will face a wide range of complex issues across a region that looks destined to become ever more important as the years go on.
Finally, a view of fleet management in Africa must include the various agencies (UN-based like Unicef or WHO, and others), which operate large vehicle fleets – the ubiquitous ‘white fleet’ – in those African countries suffering from humanitarian crises. The most recent example is Mozambique, which is now recovering from massive floods and other hurricane damage inflicted some weeks ago.
In the case of UN agencies, each emergency activates a well-established fleet supply chain, managed by UNOPS, reallocating vehicles around the continent and from their regional base in the UAE.
Without any local fleet support, they have to single-handedly manage the fleet on the ground, with all its associated logistics requirements for maintenance, fuel, etc. “This is not something a mobility provider would be able to manage,” says Mr Sacha, “but it shows you the complexity of this region in regards to fleet and mobility and the extent that individual organisations have to go to in order to support their people and fleets in Africa.”