Fitch Solutions has projected commercial vehicle sales in the SSA region to expand strongly by 9.8% in 2021 to reach an annual sales volume of about 25,000 units.
According to the research firm, this comes as a result of delays at border crossings in the near term and expected increases in infrastructure spending. Furthermore, this will lead to higher demand for commercial vehicles in sub-Saharan Africa.
Also, the rollout of vaccines will further lend support to the surge in demand, thus resulting in the increase in commercial vehicles acquired by countries. This is likely to be either through donations or increased purchases for the purposes of facilitating the region’s vaccine rollout.
Fitch Solutions expects that the demand for heavy commercial vehicles will likely see the strongest near term growth as fleet operators come under increased pressure to upgrade and expand their fleets.
That said, Fitch Solutions notes that this growth forecast may increase more if countries in the SSA region start utilizing infrastructure spending to boost employment and economic growth.
Furthermore, Fitch Solutions believes that SSA’s construction industry will see positive growth this year compared with 2020 figures. Infrastructure growth is forecast to average 5.2% per year between 2022 and 2030.
Also, Fitch Solutions believes that transport infrastructure will be a key focus of infrastructure development efforts broadly in SSA over the next decade.
This is likely to be the case as governments in the region look to overcome a significant gap in both transport infrastructure access and quality. This will be a major driver behind the demand for commercial vehicles over 2021-2030.
Infrastructure Key Projects in SSA
According to Fitch Solutions’ Infrastructure Key Projects Database, fleet operators will make new commercial vehicle purchases over the second half of 2021, following preparations to start projects.
These include infrastructure projects above US$30million in value. Currently, SSA hosts a pipeline of 1,292 transport infrastructure projects either in various pre-construction stages or under construction. That said, the region’s pipeline involves a combined US$333.9billion in investment.
Apart from the increased spending in infrastructure, acute delays at major borders in the region will affect the region’s major economies. Thereby forcing fleet operators to expand their fleets to keep flow of goods moving.
Regional borders with persistent logistics challenges facing cross border supply chains across Africa include, the Beitbridge border between Africa and Zimbabwe, a vivid example for Southern African case. Although, this border has remained open to commercial trucks, congestion is a major challenge for regional supply chains that ply that border crossing, Fitch Solutions notes.
Moreover, in West Africa, Nigeria shut its land borders for more than a year from August 2019 to December 2020 reportedly to curb goods smuggling. Despite announcements of reopening in 2021, the policy environment remains unpredictable for traders.
In East Africa, fragile geopolitical relations in the region have necessitated sudden border closures without notice, thus disrupting regional trade flows. For instance, Uganda and Rwanda have closed some key shared borders on multiple occasions in recent quarters, forcing cross-border supply chains to seek alternative routes.
However, Fitch Solutions finds that the SSA region has weak logistics network compared to other global peers. It highlights the limited levels and poor quality of transport network connectivity. Also, this is due to the difficult and inefficient bureaucratic processes facing cross-border traders across the region.
READ ALSO: To reach net-zero by 2050, deploy more clean energy technologies- IEA
