Ghana Auto Development Policy: Five years on

It has been half a decade (5 years) since the government announced the Ghana Auto Development Policy (GADP) in the year 2019. 

The Graphic Business spoke with auto expert Dr Issaka Lawerh Tetteh on Ghana’s local auto industry and the auto policy; below are excerpts of the interview.

GB. What were the primary objectives of the Ghana Auto Development Policy when it was initiated five years ago?

DILT: Thank you for the question. In order not to misquote the government, I would like to read to you verbatim what was stated in the GADP. According to the document, the strategic objectives of the Ghana Automotive Development Policy are:

a. To establish a fully integrated and competitive industrial hub for automotive manufacturing in collaboration with the private sector – global, regional and domestic;

b. To generate highly skilled jobs in automotive assembly and the manufacture of components and parts, with spillover effects into other sectors of the economy;

c. To establish an asset-based vehicle financing scheme for locally manufactured vehicles to ensure affordability for vehicle buyers;

d. To improve balance of payments through competitive import substitution and export market development;

e. To improve vehicle safety and environmental standards; and

f. To transform the quality of the national road transport fleet and safeguard the natural environment.

GB. How did you envision the policy impacting the local auto industry?

DILT: I was expecting the policy to lead to significant improvement in the automotive sector and its surrounding ecosystem. Moreover, I was hoping that it will create more employment opportunities for the youth.

GB: Five years on, what progress has been made in achieving the policy's objectives?

DILT: The country can now boast of a significant number of vehicle assembly plants. A few years ago, Kantanka Automobile was the only company assembling vehicles. 

Today we have many companies assembling vehicles in the country including Rana Motors, Volkswagen Ghana, Toyota Tsusho Manufacturing Ghana Co. Limited (TTMG), Automobiles Industries Limited (AIL), and Japan Motors Trading Company Limited (JMTC). 

I must also state that there were vehicle assembly plants in the country in the 1950s and 1960s. Unfortunately, they all collapsed due to many reasons including economic and political hurdles in the country after the overthrow of the first president of the country (Osagyefo Dr. Kwame Nkrumah). 

Apart from the establishment of vehicle assembly plants in the country, I do not see much progress. The average Ghanaian cannot access affordable financing to buy locally assembled cars. Appetite for foreign vehicles is still very high in the country.

GB. What challenges have hindered the policy's success, in your opinion?

DILT: As we say in Ghana, we are good at drafting policies, but implementation is always a challenge. There are many challenges that have hindered the policy’s success but key among them are:

a.    lack of political will. Key provisions in the policy are yet to be implemented. Many prospective investors have become quite sceptical about Ghana’s auto programme.

b.    prevalence of used cars in the market. Over 90% of all cars purchased in the country are used or second-hand and the importers of these cars have a lot of political influence.

c.     lack of patronage of locally assembled vehicles. Although the government has encouraged state agencies and institutions to buy Made in Ghana vehicles; there is no deterrent so many cars are still being imported from overseas for government-related work.

GB. Have there been any notable successes or milestones achieved by local auto developers and manufacturers?

DILT: The local assemblers have increased the number of vehicle models that they assemble in their plants giving consumers more options. The approach of assembling many models has its disadvantages too. It is well documented that economies of scale in the automobile industry continue to be a significant factor for many companies.

GB. How effective has the regulatory framework been in supporting local auto development?

DILT: As a country that wants to develop into an automotive hub in West Africa, assembling vehicles is not enough. We need a proper regulatory framework to ensure that the local industry is protected to some extent. I do not understand why our leaders think that cars that are not fit to be on the roads in Europe, Asia, and North America despite their good roads are perfectly fine to be imported into Ghana.

Not too long ago, the Ghana Standards Authority attempted to initiate a process to ensure that all used vehicles imported into Ghana were accompanied by a valid Certificate of Conformance (CoC) from an approved body. The politicians quickly quashed it due to pressure from used car importers.

How on earth is automotive homologation compulsory for new cars imported into Ghana but salvaged vehicles can freely be imported into the country?

Some of these salvaged vehicles are not even fit to carry animals let alone human beings. We need to seriously take a second look at the regulatory framework in the country. 

The government must not allow just a few people to stifle the development of the automotive sector just for their parochial interests. Indeed, I do admit that used car dealers are important stakeholders too. However, we should have a system where the used car dealers get their cars locally.

GB. Are there any gaps or inconsistencies in the policy that need addressing?

DILT: The GADP is not bad at all. I believe we can still tweak certain aspects with time. In the meantime, what is needed is the full implementation of the policy. Two key legislative measures that are stated in the policy are yet to be implemented which are:

a.    35% of CIF value as Import Duty on New and Used Vehicles.

Ban on the importation of overaged vehicles, salvaged and flooded vehicles, and new vehicles without destination certificate certifying that the vehicles are produced for the Ghana market.
 
GB. To what extent has the policy enhanced the capacity of local stakeholders in the automotive sector?

Issaka Lawerh Tetteh holds a PhD. in Management & Organization. He has worked with many key stakeholders in the automotive industry including the German Association of the Automotive Industry (VDA) and the African Association Automotive Manufacturers (AAAM). 

As an independent consultant, Dr. Tetteh has also collaborated with several organisations to carry out automotive-related studies in various countries across Africa.

Email: montynobilitas@gmail.com