By Moses Akaigwe
Since the coming into effect of its Automotive Development Policy (GADP) in October 2019, Ghana has been attracting the attention of the auto world with at least three of the biggest names in the industry now assembling vehicles in the country less than two years after.
This is coming at a time when Nigeria’s National Automotive Industry Development Plan (NAIDP) is on the slow lane with the assembly plants gasping for breath.
Last month, the African Association of Automotive Manufacturers (AAAM) followed the trend in Ghana by hosting an exploratory visit of automotive component manufacturers to the West African country. The objective was to introduce potential investors to the Ghanaian automotive market, and to Nigeria’s, which is bigger, with incomparably higher number of assembly plants.
The initial visit was focused on aftermarket opportunities, which in time will also support OE (original equipment) assembly as the volumes grow, because almost all components are now imported.
Executives from Maxe (a division of KAP Automotive), Supreme Springs (a division of Metair) and Hudson Rubber were involved in a week of back-to-back engagements with OE assemblers, local manufacturers, vehicle dealers, and spare parts importers, as well as the Ghana Standards Authority, the AfCFTA Secretariat and the Ministry of Trade and Industry.
An important aspect of the Ghana Automotive Development Policy (GADP) is to develop auto component manufacturing with local partners. In a positive meeting with the Minister of Trade and Industry, Alan Kyerematen, on the last day of the visit, he emphasized the significance of the initiative and government’s willingness to engage in competitive fiscal incentives for component manufacturers wanting to invest in Ghana.
“This is the first of many visits planned by the AAAM office in Accra in support of developing the automotive industry in Ghana”, said David Coffey, CEO of AAAM. “It was most encouraging to witness the positive interaction between potential investors, local companies and the willing support offered by the Ghanaian authorities”, concluded Coffey.
Kyerematen indicated that the takeoff of the component manufacturing industry within the sector would provide a strategic guideline for the development of the steel, aluminum, and rubber industry in the country.
Like Nigeria’s much older NAIDP that came into effect in 2014, the vision of the government of Ghana in introducing the GADP was to stimulate investments in the production of vehicles, bolster the country’s economy and halt the flight of revenue to other countries.
But Ghana also envisioned “a fully integrated and competitive industrial hub for the automotive industry in the West African sub-region,” which has encouraged Volkswagen, Toyota and Nissan to invest in the country even as others have indicated they would follow suit. While Volkswagen and Nissan have already commenced production, Toyota plans to start later this year.
Meanwhile, Nigeria’s five-year-old NAIDP has continued to falter, suffering from policy inconsistency and government’s lukewarm attitude to a legal framework expected to give confidence to those who have so far invested and encourage those that might be sitting on the fence.
Unfortunately for the industry, the Nigeria Automotive Industry Development Plan Fiscal Incentive and Guarantees Bill passed into law by the National Assembly three years ago was not assented to by President Muhammadu Buhari.
And, despite assurances, first by the director-general of the National Automotive Design and Development Council (NADDC), Jelani Aliu, in 2019, and much later by the Minister of Industry, Trade and Investment Minister, Niyi Adebayo, that the bill would return to the lawmakers as an executive bill, this is yet to happen.
To worsen the fate of the local industry, President Buhari, on December 31, signed the 2020 Finance Bill into law. Against the spirit of the auto policy that imposes high duties and levies for imported fully-built vehicles, the act encourages importation with a considerable reduction in such tariffs, which industry watchers believe will lead to the local auto plants shutting down.