Chairman and managing director of Volkswagen (VW) South Africa who is also in charge of VW’s presence in sub-Saharan Africa has lauded Ghana’s efforts in establishing an automotive industry.
According to Thomas Schaefer, policies being established by Ghana in the automotive industry are very close to that of successful vehicle producing countries such as South Africa and Thailand.
In an interview with the Africa Report, Mr Schaefer said Ghana has a “clear strategy and vision.” He added that, the country has “put a proper policy in place,” in its bourgeoning automotive industry.
“The President wanted it. They made it happen. I hope it encourages their neighbour.”
While comparing Ghana’s strides in the automotive sector to that of Nigeria, he indicated that because Nigeria’s automotive policy is still unsigned, that is why VW’s presence in the biggest market in Africa continues to be “dormant.”
Ghana’s government has been pushing for the establishment of an automotive industry against a lot of persistent odds.
In March 2020, the government made a strong case for the passage of a law that will lay the foundation for an automobile industry in the country.
There was an amendment to the Customs Act, 2015 (Act 891) which provides some incentives to Ghanaian car manufacturers through the Ghana Automotive Industry Policy.
This is to pave the way for the industry through collaboration with the private sector – global, regional and domestic, to ensure that more jobs are created in the areas of automotive assembly and the manufacture of components and parts, with several positive spillover effects into other sectors of the economy.
However, importers of both used and brand new cars are fighting for a piece of the pie. Spare parts dealers and artisans in the country’s automotive value chain are stuck on the edge of their beds as the future of their livelihoods remain uncertain.
Regardless, government is resolved in planting firmly the roots of an automotive industry in the country.
Finance Minister, Ken Ofori-Atta stated in the mid-year budget review that,
“some of the leading global automobile companies have already established commercial interests in Ghana to assemble their brand of vehicles”.
VW and Sinotruck have started assembling vehicles in the country since March this year. Toyota and Nissan are to follow.
Key measures adopted by Ghana to stimulate local production include banning the import of salvaged vehicles and setting a maximum age of 10 years on cars that can be imported.
The Ghana Revenue Authority, on Friday, 31st July, 2020, disclosed that the law banning the importation of salvaged vehicles into Ghana will be effected on November 1, 2020.
Deloitte, an audit, consulting, financial advisory and risk advisory firm in a 2018 report on the automotive industry in Africa pointed out that, Africa is the final frontier for the automotive market globally.
“Due to the rise of income levels in many African countries and the emergence of a middle class, Deloitte regards the continent as the final frontier for the global automotive industry. Given Africa’s population size and its positive economic outlook, automotive companies will be able to gain a competitive advantage by adopting a medium- to long-term view towards the continent.”
This assessment by Deloitte was because, “Africa’s automotive market is relatively small.”
According to the firm, “In 2014, there were just over 42.5 million registered vehicles in use in Africa – a continent of approximately one billion people. As a result, the motorisation rate on the continent is only 44 vehicles per 1 000 inhabitants.
“This is far below the global average of 180 vehicles per 1 000 inhabitants, and lower than other developing regions such as Latin America (176) and Developing Asia, Oceania and the Middle East (79).”
In furtherance, the report revealed that out of the estimated 1.55 million cars that were “sold or registered” on the continent,
“South Africa, Egypt, Algeria and Morocco… accounted for more than 80% of total new vehicle sales in 2015.”
