Mega Trends Driving Transport Infrastructure

Connected vehicle technologies are revolutionising and democratising transportation for safer, smarter, more responsible and more accessible driving, says Dinesh Paliwal, Indian-American businessman and CEO of Harman International Industries.

Connected vehicle technologies are revolutionising and democratising transportation for safer, smarter, more responsible and more accessible driving, says Dinesh Paliwal, Indian-American businessman and CEO of Harman International Industries.

Already flying taxis, self-driving cars, super-trains and the Hyperloop are among the many developments unfolding in the transport arena.

Infrastructure recently caught up with Mike Whitfield, MD of Nissan Group of Africa, to chat about the trends influencing the transport sector and their impact in the next five years, and to Deloitte’s automotive industry leader Dr Martyn Davies on how transport trends are set to influence infrastructure development in Africa.

“The technology currently in development in the automotive sector will give rise to a whole new driving experience, enabling us to move through life with greater confidence, exhilaration and connection to the world around us. Clean and connected mobility with vehicles that can power city grids, learn from one another and offer increased utility is the future that the automotive industry is working diligently towards as connected mobility will continue to be the dominant trend for many years to come,” says Whitfield.

He explains that with Africa’s move towards cleaner energy sources, industry is witnessing an increased uptake in various modern energy technologies, including electric vehicles (EVs).

“Nissan brought the first fully electric EV, the LEAF, to South Africa in 2013. We have also ensured that there are sufficient charging stations to support local EV customers.”

Apart from the sale of the LEAF and the BMW i3 electric, luxury vehicle brand Jaguar recently announced its intention to launch its Jaguar I-Pace. The drive for clean energy vehicles has also seen German car manufacturers Audi and VW signalling their intention to manufacture Evs.

According to professional services company Deloitte, the pace of global EV adoption is expected to increase to four million in 2020, 12 million in 2025 and to 21 million in 2030.

While this is good news for clean energy proponents, Davies points out that the uptake of Evs on the continent remains extremely low.

“Official statistics indicate that South Africa sold only 66 Evs last year – this is when it was compared to China, which sold roughly 1.2 million Evs.”

The challenge associated with the transition to low- and zero-emission vehicles, says Davies, is the requirement for an entire infrastructure roll-out, “including power infrastructure, road infrastructure, service infrastructure and subsidisation by the state – an entire ecosystem needs to be created to enable the EV sector”.

Whitfield agrees that there needs to be commitment from automotive manufacturers, urban planners, energy companies and governments to ensure that a suitable strategy and succession plan is rolled out.

Highlighting the importance of the automotive sector to the economy, Whitfield explains that automotive production is already the largest part of the manufacturing sector in South Africa and accounts for 7% of the country’s annual gross domestic product.

“The African Association of Automotive Manufacturers says that overall demand for Evs in Africa is set to potentially increase by 50% within the next six years. Given that the automotive sector is a vital part of the economy, to remain competitive it is essential that the sector continues to evolve and embrace change.”

Furthermore, elements such as artificial intelligence and other Industry 4.0 technologies are set to bring further automotive innovations that will redefine mobility.

Davies points to the rise of drone technology which is proving to be successful in medical delivery to rural areas.

In Africa, this is currently taking place in areas such as Rwanda, Uganda and Tanzania.

“Over the next few years, we will start to see innovative companies and multinationals putting up funding to roll out cutting-edge initiatives – these will be taken up by countries whose governments are agile and keen to adopt latest technological developments,” states Davies.

Trends driving transport infrastructure development over the next few years

So, with exciting developments on the transport horizon, what are the factors set to influence transport infrastructure development on the continent?

Davies highlights two main trends:

▪           A rise in Chinese financing for transport infrastructure development in Africa.

▪           Policy issues around the African Continental Free Trade Area (AfCFTA) agreement.

According to Deloitte, China has over the past two decades been instrumental in financing infrastructure projects in Africa and is today the “single largest financier of African infrastructure, financing one in five projects and constructing one in three”. Most of the projects funded are those in the transport, shipping and ports sectors (52.7%), followed by energy and power (17.6%), real estate (15%, including industrial, commercial and residential real estate), and energy and power (13.1%).

“The trend of the Chinese financing transport infrastructure in Africa has been a real game-changer and has underpinned infrastructure development and accelerated growth. We are seeing Chinese state capital and Chinese state-owned companies and construction players, building high capital infrastructure, especially in East Africa (Ethiopia, Kenya and Tanzania), Nigeria and to an extent North Africa.

“And while it does come with problems associated with debt and risk, these will need to be managed and/or re-negotiated – it has been incredibly economic-enabling for the continent.”

The second mega trend is associated with policy related to the AfCFTA agreement – a trade agreement between 49 African Union member states aimed at creating a single market enhanced by free movement.

“It is refreshing to note that apart from the Chinese who have been proponents of free trade since 2001, Africa is leading the way in supporting and driving free trade – compared to the rest the world where the majority of countries are promoting protectionist views,” says Davies.

With implementation, the AfCFTA agreement has the potential to boost intra-African trade by 52.3% through the elimination of import duties, and by over 100% through the elimination of non-tariff barriers.

Following the signing of the agreement by 23 countries earlier this year, the various countries are in the process of tabling it at the different parliamentary levels.

“It is up to the individual countries to ratify the policy at the parliament level,” says Davies.

With the proposed adoption of the AfCFTA agreement, there is an expectation of “improvement in efficiency at border posts, both in terms of hard and soft infrastructure”.

“The softer policy initiative will be supported to an extent by harder infrastructure developments. And we expect to see smaller wins such as a reduction in tariffs which will encourage flow of products across borders and subsequently increased intra-African trade,” explains Davies.

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