Your Next Car Could Be Made In Africa
WHY YOU SHOULD CARE
Because the next Detroit could be in Africa.
The gleaming white arms of the machines move massive amounts of steel through a vast, brightly lit space. Near the end of the line, the metal begins to take shape — a chassis here, a door there. Workers in crisp jumpsuits solder the last parts together.
This is auto manufacturing at its sleekest and shiniest — and it’s all taking place in Tangier, Morocco. Some of the workers are wearing hijabs, and nearly all of them are speaking Arabic. The factory, owned and operated by the French company Renault, didn’t exist four years ago; today, it’s the single largest car factory in all of Africa, producing some 229,000 vehicles last year. To some, it’s also a shining example of a different kind of revolution in the region, one that proponents hope will boost living standards, bolster stability and turn this North African country into a modern-day Motown.
In recent years, carmakers like Renault and Peugeot have poured billions of dollars into Morocco, which, in turn, has grown its auto exports to almost $5.3 billion, up from nothing just a few years ago. Automaking has edged out agriculture and phosphates as the country’s largest industry, and economists believe it’ll drive real GDP growth of more than 3 percent a year. Morocco has become to France what Mexico is to American companies like GM and Ford, says Peter Hertenstein, a Ph.D. candidate on the global auto industry at the University of Cambridge.
What’s, um, fueling this trend is a combination of factors, some more likely than others. The cost of labor is relatively cheap in Morocco — a worker there makes several times less the going rate in poorer European countries. Meanwhile, the government has invested mightily in infrastructure for foreign manufacturers, too; a special train takes Renault cars assembled in Tangier to a massive port. Meanwhile, history “plays a greater role than people think,” says Jostein Hauge, a University of Cambridge scholar who focuses on production networks and industrialization in Africa. The tight relationship between Morocco and its former colonizer, France, doesn’t fit squarely into economic theory, but it matters.
Of at least equal consequence is that the Arab Spring largely spared Morocco. Five years ago, revolts spread across North Africa and the Middle East, toppling governments in some countries, setting off wars in others and sparking economic downturns almost everywhere. But Morocco, a relatively stable monarchy, had already begun pivoting toward the auto industry. Seeking to emulate success stories like South Korea — once a poor, agriculture-based economy and now squarely in the first world — Morocco had rolled out special economic zones and other incentives for foreign businesses. Thus far, it’s worked: Foreign direct investment grew a whopping 15 percent for each of the five years through 2015. Between 2010 and 2015, Morocco’s share of regional FDI swelled from 12 percent to 31 percent.
But how much mileage will Morocco gain over the long run? Car assembly is not necessarily a stepping stone to a more lucrative future.
Its own citizens could be the first wave: Morocco’s highway network grew 16 times over between 1999 and 2014. Several years ago the government instituted a cash-for-clunkers program aimed at buying back old cars, with Renault offering a cash credit toward the purchase of one of its new cars.
But how much mileage will Morocco gain over the long run? Even though the auto boom has created 100,000 jobs, according to the government — no small feat in a country where youth unemployment stands at 20 percent — critics point out that car assembly is not necessarily a stepping stone to a more lucrative future. After all, most automotive research and development is concentrated in Detroit and Stuttgart (Germany), far from Africa. It’s also not clear that manufacturing jobs alone can ensure stability: While the environment for foreign investors is relatively free, other aspects of society are far from it — Reporters Without Borders considers Morocco less free than Algeria or even Afghanistan.
Still, for Moroccans wanting more than a 21st-century maquiladora, there is reason to hope. The government is emphasizing a sustainable auto ecosystem, aiming to ramp up its share of locally produced auto parts from 40 percent to 65 percent of assembled cars. And while most of its cars are exported to European markets, Morocco is also trying to position itself as a hub for companies looking to do business in Africa, with firms leveraging Moroccan companies already operating in African countries. The pitch might be working: Last summer, PSA Peugeot Citroën signed a $600 million-plus deal to open an auto plant in the seaside town of Kenitra, which, it hopes, will be a springboard for selling a million cars in Africa by 2025.
To be sure, Morocco isn’t the only African country with its sights set on a slice of the car market. South Africa still leads the market with a production count of more than 617,000 cars last year. The industrialization 5,000 miles north may be a source of “bad news” to some, says Nimrod Zalk, an automotive advisor in the South African government. But over the long term, he says, a more vibrant sector will benefit everyone on the continent.