Automobile sector backbone to industrialisation, AfCFTA sustainability

Wamkele Mene automobile sector

The Secretary-General of the Africa Continental Free Trade Area (AfCFTA) Secretariat, Wamkele Mene, has touted the budding automobile sector as a critical backbone to industrialization and subsequent sustainability of the free trade area.

He stressed that industrialization thrives on the shoulders of technology and efficient transportation systems for the movement of factors of production, be it the movement of raw materials, finished goods, or human resources, hence the ability to develop a robust local automobile sector will be a catalyst for industrial growth, translating into GDP growth and economic transformation.

The Secretary-General, therefore, called on governments of various African countries as well as other stakeholders, to be deliberate about creating an enabling ecosystem for the local assembling and manufacturing automobile sectors to survive.

“The automotive sector must be the bedrock of the industrialisation of Africa. We have to work together to make sure that the rules of trade enable the automotive sector players to invest more and create opportunities.

“We have a very unique opportunity on the back of the AfCFTA, to drive industrial development in this continent. If we do not industrialise our continent on the back of the automotive sector, we will not see the results that we want to see.

The automobile sector is the heart of this industrialization drive that we aspire to achieve. I see no reason why we cannot establish a continental benchmark for the automotive sector leveraging on the AfCFTA and the roles of origin.

What is supposed to do is to truly establish a continental standard for the automotive sector. We must work together to locate countries and regions from a strategic point of view that have the capacity to develop the automotive sector continentally,” he said.

He made these remarks at the maiden Ghana Automobile Summit 2023, and the official unveiling of the Automobile Assemblers Association of Ghana (AAAG), the local chapter of the African Association of Automotive Manufacturers (AAAM).

President of AAAG, and CEO of Volkswagen (VW) Ghana, Jeffrey Oppong Peprah, in his address, mentioned that the birth of the Ghana Automotive Development Policy (GADP) in 2019, opened up the space for the establishment of assembly plants but it will require the full implementation of the policy for the industry to attain full potential.

Banning salvaged vehicles

He indicated that the goal of AAAG among others is to grow the market share of local production of vehicles from the current 9.7 percent of the country’s new car market to about 60 percent by 2027. However, this, he added, can only be achieved when the government fully implements the remaining provisions in the auto policy to the letter.

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

“The Ghana automotive industry was valued at US$4.6 billion in 2021 and is forecasted to reach US$10.64 billion by 2027. Establishing the Ghana Automotive Industry Development Centre as part of GADP earlier this year was an important milestone in helping to grow the industry.

Since 2020 we have seen the total local production of vehicles rise to 4,700 by last year which accounted for 9.7 percent of the country’s new car market, with the full implementation of the GADP this can be grown to around 60 percent by 2027,” he said.

The AAAG has called on the government and asked the Ministry of Finance and the Ministry of Trade and Industry to implement the remaining provisions of GADP as soon as possible to help accelerate and ensure the sustainable growth of the fledgling industry.

The maiden Ghana Automobile Summit was under the theme “Creating a New Economic Backbone for Ghana and The Sub-Region.”

Ghana now has seven car assembly plants namely Volkswagen, Toyota, Sinotruck, Nissan, Peugeot, and Kantanka Automobiles with Rana Motors opening their Kia facility last month, which all assemble semi-knocked down units.

AAAG believes that as one of the most influential industries globally, the automobile sector has consistently driven advancements in manufacturing, supply chain management, innovation, and economic growth, hence Africa must not be left out.

Minister for Trade and Industry, Kobina Tahir Hammond, assured the automotive sector of the government’s support and swift response to their demands. “We will continue to provide a stable and forward-looking policy environment and incentive framework for the automotive industry to thrive,” he said.

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