Productive capacity and regional value chains of the automotive sector in Southern Africa
Sodiq Arogundade et al.
Abstract
Southern Africa is one of the major suppliers of raw materials necessary for the automotive sector’s supply chain. However, the region remains far behind in integrating into the global supply chain, with the exception of South Africa. Hence, building supply chain resilience is one of the region’s major goals, including the Sustainable Development Goals, Agenda 2063, and the regional supply chain under the African Continental Free Trade Agreement (AfCFTA). This paper presents a regional supply chain mapping of the automotive industry. The article also empirically analyzed the impact of productive capacity on intra-Southern African trade along the automotive value chain. The analysis of the regional value chain (RVC) mapping suggests that South Africa is the most integrated country in the Southern African region across the tiered automotive component value chain, demonstrating a strong position in intra-regional trade for all levels of component production. The empirical analysis of the gravity models (PPML and IV-PPML) underscores the crucial role of productive capacity in enhancing intra-Southern African exports of automotive components, with particular emphasis on Tier 1 components. As the most advanced and high-value-added segment within the automotive value chain, Tier 1 components require a robust foundation of manufacturing capacity, skilled labor and efficient processes to meet the stringent standards of both regional and global markets. The analysis indicates that countries with higher levels of productive capacity are better positioned to serve as reliable suppliers of these essential components, facilitating stronger trade ties within the Southern African region. This study highlights the significance of productive capacity in shaping Southern Africa's participation and competitiveness within its regional automotive value chains (RVCs) and global value chains (GVCs). South Africa, leveraging its established manufacturing base and robust infrastructure, currently serves as the pivotal anchor, dominating intra-regional trade in Tier 1, Tier 2, and Tier 3 automotive components, a position directly reflective of its superior productive capacity. While other regional nations like Zambia, Botswana, and Namibia demonstrate emerging competitiveness and rely on South Africa for advanced components, the overall RVC is notably skewed towards the export of Tier 3 (raw materials), even from South Africa itself, which dedicates 65% of its automotive export value to this segment. This indicates a significant underperformance in value-added processing and manufacturing, leaving the region susceptible to global demand fluctuations and diminishing its overall competitiveness in the global automotive supply chain. However, the analysis reveals a nuanced impact of productive capacity on RVC integration. Although increased productive capacity generally stimulates intra-regional trade for Tier 1 components for both exporters and importers, paradoxically, a rise in an importer's productive capacity can lead to self-sufficiency and reduced dependency on other regional suppliers, potentially hindering deeper RVC integration. Furthermore, for Tier 2 and Tier 3 components, a higher productive capacity in exporting countries surprisingly shows a negative correlation with intra-regional trade.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.