Africa must reposition itself to welcome car manufacturers – Trade Minister

Africa must reposition itself in readiness to welcome car manufacturers to bolster its own supply and boost its prospects for regional trade as the rest of the world is confronted with economic development headwinds.

Mr K.T Hammond, the Minister of Trade and Industry, said besides Ghana, other African countries, including Kenya, Nigeria, and Rwanda, had emerged as new automotive manufacturing hubs in addition to the traditional ones of Morocco, South Africa, and Egypt.

The Minister was speaking at the maiden edition of the Ghana Automotive Summit 2023 and the inauguration of the Automobile Assemblers Association of Ghana (AAAG) on the theme: “Creating a new economic backbone for Ghana and the Sub-Region” in Accra.

The summit brought together leading experts and industry professionals in the sector to discuss the latest trends, challenges, and opportunities in the automobile industry.

The AAAG membership includes Volkswagen Ghana, Japan Motors, Rana Motors, Kantanka Automobile, Silverstar Ghana, and Stallion Group Toyota-Tsusho Company with Associate members being Toyota Ghana and CFAO Motors Ghana.

The Minister said Africa acknowledged its diverse wealth of natural resources, its dedicated and hardworking labour market, an increasing population as well as an educated and tech-savvy middle class.

He said the continent could no longer accept the dumping of overused and aged vehicles on its markets as a normal way of doing business in the automotive market.

“As a first step, however, we recognize the need to make new and affordable vehicles widely available,” he added.

He said to attract further investment for the development of an integrated Automotive industry, and to harness the multiplier effect in developing the industry, the Government had developed a Components and Parts Manufacturing Policy.

The policy is to enhance local content and the localization of spare parts for the after-market and ultimately, component supplies for vehicle assemblers.

He said the policy was to provide a pack of incentives to drive investments into component manufacturing to feed both the Original Equipment Manufacturers assembly and the after-market industry while encouraging exports into ECOWAS and under the AfCFTA.

“We are also developing a robust vehicle financing scheme that will provide asset-based financing to address the constraint of weak financing and expand vehicle ownership,” he said.

Mr Hammond said to strengthen the country’s assembly base, the Ghana Standards Authority had with the active participation of all industrial stakeholders concluded work on Compulsory Vehicle Standards and other pieces of regulation and quality assurance measures for the enhancement of the automotive industry.

Mr Jeffrey Oppong Peprah, AAAG President, said “Since 2020 we have seen the total local production of vehicles rise to 4,700 by last year which accounted for 9.7 per cent of the country’s new car market and we at the AAAG believe that with the full implementation of the Policy and this can be grown to around 60 per cent by 2027.”

The Ghana automotive industry was valued at 4.6 billion US Dollars in 2021 and is expected to reach 10.64 billion US Dollars by 2027.

He said establishing the Ghana Automotive Industry Development Center as part of the policy earlier this year was an important milestone in helping to grow the industry.

He said there were few provisions of the policy still outstanding and “we call on government and ask the Ministries of Finance and Trade and Industry to implement these provisions as soon as possible to help accelerate and ensure the sustainable growth of our fledgling industry.

These include the banning of the sale of used vehicles older than 10 years, stopping the sale of salvaged vehicles and implementing the provision that the 35 per cent duty on vehicles imported is in the same category as those assembled locally.

“We at the Automotive Assemblers Association believe that the Auto Summit will help drive our industry as we explore its future and how technology and innovations will shape it,” he said.