Will Africa Become the Next China?

It won't be long before OEMs start asking their suppliers for the "Africa price."

Chinese telecommunications manufacturer ZTE Corp. announced today that it will build a cell phone factory in Bahir Day City, Ethiopia. The plant, which will cost some $5.2 million (US), will have the capacity to produce 3,000 to 4,500 mobile phones per day. ZTE figures there’s a lot of pent-up demand for cell phones throughout Africa, and it wants to capitalize on it. Read about it here.

(In fact, China has become Africa’s third-largest trade partner, after the US and France. According to a report by China’s General Administration of Customs, bilateral trade between China and Africa will exceed $100 billion (US) in 2008.)

If we get any news from Africa these days, it’s usually bad: poverty, drought, rampant AIDS, conflicts in Sudan and Nigeria, Islamic extremism, political oppression in Zimbabwe.

Under the radar, however, Africa is quietly flexing some manufacturing muscle, and I wonder just how long it will be before we start talking about outsourcing to Africa the same way we outsource to China today.

It’s not so far-fetched. Due to the strength of the euro, Airbus is considering setting up shop in Tunisia. BMW operates manufacturing facilities in Cairo, Egypt, and Rosslyn, South Africa. Mazda has facilities in Kenya, Zimbabwe and South Africa. Toyota operates assembly plants in Mombasa, Kenya, and Sandton, South Africa. The latter employs more than 9,500 people. Ford, GM, Honda and Volkswagen also have plants in South Africa. Chinese electronics manufacturer Hisense Group runs a television assembly plant in Johannesburg, South Africa.

Overall, South Africa has an established, diversified manufacturing base that has shown its resilience and potential to compete in the global economy. In fact, manufacturing contributed 20 percent of South Africa’s annual GDP in 2006.

It won’t be long before OEMs start asking their suppliers for the “Africa price.”