This is a best prospect industry sector for this country. Includes a market overview and trade data.
The automotive sector in Ghana is largely made up of retailers of imported used vehicles and a few distributers who deal in the retailing of new vehicles.
The sector is set to experience significant change thanks to the introduction of the Ghana Automotive Development Policy in 2019, by which the country seeks to attract investment from leading Original Equipment Manufacturers (OEM) and investment partners. One of the aims of this policy is to make available affordable new vehicles in the Ghanaian market to reduce the heavy reliance on used vehicles, which create environmental and safety issues.
Recent estimates put the average number of imported vehicles in the country at over 100,000 per year, of which about 90 percent are used vehicles, with an estimated value of US$1.14 billion per annum, accounting for 12 percent of the country’s import bill and constituting the top single import item. The United States is one of the three leading sources of used auto imports, along with Japan and Germany.
Some OEMs have already signed assembly agreements, including Volkswagen AG, Nissan Motor Company, Toyota Motor Company and Suzuki Motor Company.
There is one local company, Kantanka Automobile Company Limited, that assembles the Kantanka line of vehicles from Completely Knocked Down (CKD) kits from China. The main products are sedans and SUVs, although the company has also ventured into the production of military vehicles. The vehicles have generally not been well received by the local market because of doubts about their durability.
The current government has purchased some of the sedans and SUVs to support the business and encourage local patronage.
The Ghana Automotive Development Policy offers prospects to U.S OEMs, thanks to some incentives for investors.
In April 2020, Ghana passed the Customs Amendment Act, 2020, Act 1014, to try to boost investment in the automotive sector. It includes:
- Corporate tax holidays ranging between five years for Enhanced Semi Knocked Down (SKD) Registered Assemblers and 10 years for Completely Knocked Down (CKD) Registered Assemblers
- Exemption of import duties and related charges on any plant, machinery, equipment or parts of the plant, machinery or equipment (that are not already zero-rated) imported for SKD, Enhanced SKD and CKD Auto Assembly.
- Waiver of the import duty and domestic levies on imported SKD, Enhanced SKD, and CKD kits and on Original Equipment components, including:
- a. Import VAT
- b. National Health Insurance Levy
- c. GET Fund
- d. EXIM Levy
- e. Special Import Levy
- Ban on the importation of certain categories of automobiles (vehicles aged over 10 years and salvaged/accident vehicles).
- Asset-based vehicle financing mechanism to promote the purchase of locally assembled vehicles and vehicles imported by local assemblers (program vehicles), by the general public. Another important incentive for U.S. automobile investors is the planned launch of the Africa Continental Free Trade Agreement (AfCFTA), which will create a large common market with a population of about 1.2 billion having an estimated GDP of $ 2.5 trillion. It is also instructive to note that Ghana was selected to host the Secretariat of AfCFTA in Accra, making it a potential platform for regional and continental market expansion.