Ghana’s Trade and Industry Minister, Alan Kyerematen, has asked African countries to work at creating the right business environment and legislation to lay the platform for the continent in its quest to become a relevant player in the global automotive industry.
Ghana, through its Automotive Development Policy, has already amended portions of her law to ban the importation of some categories of second hand and salvage cars to allow the for the assembling of cars locally.
According to a 2015 Deloitte Africa Automotive Insights, Africa’s automotive market is still considered to be relatively small. In 2014 for instance, there were just over 42.5 million registered vehicles in use in Africa – a continent of approximately one billion people.
As a result, the motorization rate on the continent is only 44 vehicles per 1 000 inhabitants.
This was said to be 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).
The Deloitte Africa Automotive Insights said in 2015, approximately 1.55 million new vehicles were sold or registered across Africa.
South Africa, Egypt, Algeria and Morocco – all countries with established and rapidly developing automotive industries – together accounted for more than 80% of total new vehicle sales in 2015. Based on recent sales trends, some sources estimate that Africa’s passenger vehicle sales could reach up to 10 million units per annum within the next 10 years.
Ghana’s quest to build a local automobile industry has not started off without challenges and opposition. Government says the passage of the Customs (Amendment) Bill, 2020, which bans the importation of second hand cars of more than ten years old, as well as salvage cars, also known as accident cars, will take effect from October, this year.
The Automobile Dealers Union of Ghana and other interested parties have been up in arms against the policy, calling for a review to sustain their businesses. They have cited possible job losses should the implementation of the policy kick start.
Although the implementation will lead to an estimated revenue loss of approximately GH¢802.25 million for the first three years, government believes the benefits largely outweigh the losses as the new amendments will boost the Ghana Automotive Manufacturing Programme which has so far attracted several car assembling plants into the country.
Already, Toyota and Suzuki have formally committed to set up car assembling plants in Ghana. This was after Volkswagen, Nissan and Sinotruk also expressed an interest in Ghana.
Volkswagen recently launched the first set of locally assembled cars, while discussions pertaining to the operations of Renault, Kia and Hyundai are also ongoing.
Speaking during the opening of the 1st ever virtual Africa Automotive Forum, organized by Deloitte and the African Association of Automotive Manufacturers, on the theme, ‘Enabling policy by government’, Mr. Alan Kyerematen admitted that government had to be aggressive in passing the legislation to create the enabling environment to kick start Ghana’s automobile industry.
He thus urged African governments to take steps to engage all relevant stakeholders to get the buy-in of local consumers.
The CEO of the African Association of Automotive Manufacturers, Dave Coffey, said collaboration at all levels is required to achieve the vision of making the continent a powerhouse in the automobile industry.
It is the view of AAAM that there are opportunities in Africa’s young and growing population with rapid urbanization; hence the need to unlock its potential in the automotive industry, owing to a growing vehicle demand, to become a true industry competitor.
The automotive industry practitioners who participated in the forum include Masa Sugano, Deputy Executive Director, Africa Region of Japan External Trade Organization, Mike Mabasa, CEO of the National Association of Automobile Manufacturers of South Africa, Anthony Black, a Professor in the School of Economics at the University of Cape Town, Mike Whitfield, AAAM President and Chairman of Nissan Group, and Dr. Sahar Nasr, former Minister of Investment and International Cooperation, Egypt.
The next two sessions of the forum are scheduled for 16th and 30th September respectively, to discuss ‘Regional value chains’ and ‘Driving affordability and mobility solutions’.