The Hidden Power: Botswana’s stake in South Africa’s Automotive Industry

Vehicles are the fifth most traded product class in the Southern African Development Community (SADC) and the leader in that arena by some distance in South Africa which produced over 600,000 vehicles as of 2023. South Africa doesn’t only stand head and shoulders above the rest in vehicles but the entire transport equipment sector in Southern Africa accounting for over 20,000 products as of 2020. Botswana has been able to leverage its proximity to South Africa’s Automotive Industry through its participation in the Southern African Customs Union (SACU) to great effect for manufacturing despite the sector only accounting for about 5% of the country’s GDP. 

This isn’t to say that no attempts were made in Botswana to assemble vehicles wholesale, the country was assembling heavy-duty vehicles like Kamaz, Volvo, and Scania. Additionally, it made a deal with South Korean car company Hyundai in the 1990s for a plant for light vehicles. Unfortunately, the heavy vehicle plants relocated to South Africa, after there were some complaints about rules of origin for the vehicles that were being made in Botswana and how they related to South Africa. 

As for Hyundai, the plant was meant to support the South African market by way of a Small-knock-down (SKD) Plant which would see partially assembled vehicles being competed in Botswana. However, due to financial issues, the plant closed down in 2000. 

How did Botswana overcome its automotive industry setbacks?

Relegated to the periphery, Botswana in recent years became a key supplier for South Africa’s Automotive Industry by way of owning more than half of the wiring harness market in its bigger neighbour's car manufacturing sector. Botswana is the highest-ranking African country for vehicles and automotive component imports into South Africa, among the nations accounting for over a billion Rands of imports for the sector.