Lack of Logistics Support Major Hurdle for EV Market Growth in Africa: UNCTAD

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A recent report released by the United Nations Conference on Trade and Development (UNCTAD) suggests that Africa’s critical mineral industry can help manufacturers looking to diversify their supply chain. It can power their EV market and add value to their global supply chain. The report places the continent in the fifth position on the world’s critical metals reserve within the EV sector.

Logistical Challenges
However, it faces certain logistical challenges, which as per the UNCTAD analysis, suggests that in order for Africa to emerge as an EV market, it needs to develop a high-tech and green products market.

The report evaluates Africa’s accessibility to the top 5 critical minerals present in Africa such as, Cobalt, Manganese, Graphite, Copper, Nickel, Lithium and Iron Ore. The report indicates that to develop its market, Africa would require increased production of key elements like magnesium that are used in EV cars. However, certain logistical challenges faced by Africa, prevent the EV market expansion such as issues in securing a good contract, access to licensing, strengthening domestic industries, and issues in developing local firms as well as manufacturing components. On the other hand, the lack of efficient linkage between foreign firms and local suppliers creates bottlenecks in the supply chain.

Overcoming logistical challenges in the processing and production of resources in the EV market requires investment. Africa depends on investment to expand its market mainly from China. To overcome this dependence, western countries are making investments in the African market that can help them bypass the Chinese market and help them create an alternative supply chain. The Western countries’ investment in Africa’s mineral reserve exploration can help them set up alternative processing mineral facilities in China.

Currently, as per the report, UNCTAD report presents details on the key critical minerals present in Africa, and their usefulness in developing a technology-intensive global supply for their EV market. As indicated in the report, Africa has access to supply 43% of the raw material.

Need for Western Investment
Africa has an abundant supply of magnesium however, due to the fundamental challenge of poor infrastructure, limited skilled labor, and lack of standardization, the EV sector has lagged. Therefore, to utilize its resources efficiently, bringing investment through partnerships between Europe and Africa can help African countries build refineries, processing units, and transportation facilities. On the other hand, investing in EV infrastructure in Africa can help them reduce energy dependence on fossil fuels in the transportation sector. Since China has already captured the African market, western countries face the challenge of setting up an alternative market. This would require infrastructure investment, without which it would be difficult to counter China’s position in the EV market.

Thus, financial support is a challenge for Africa that prevents them from fulfilling the soaring demand.