Ghana imports over 100,000 cars a year, 90% of which are used or second-hand cars. The Ghana Government, through its Ghana Automotive Development Policy is making available affordable new cars on the market. This has birthed some OEM assembly plants – Toyota, Nissan, Volkswagen – on the market. We don’t expect these to materially affect the importation of used or second-hand cars in the medium term.
90% of used (second-hand) cars imported into Ghana every year are valued at $1.14 billion. The second-hand car business in Ghana is a Billion Dollar industry. Even more consequently it is controlled by Ghanaians, unlike the new car market that is largely foreign-owned.
Second-hand car dealers must scale high capital barriers to stay in the business. Not so the new car market, that is supported fiscally with bonded warehouses, allowing them to keep their capital commitment relatively low. We believe the Ghanaian Government has an opportunity to deliver on wide-ranging and varied goals with the very Ghanaian business of second-hand cars, and their dealers.
“90% of used (second-hand) cars imported into Ghana every year are valued at USD 1.14 billion. The second-hand car business in Ghana is a Billion Dollar industry”
First, the Government will be able to use its purchasing wallet to significantly affect the economy. The Government of Ghana should focus its car buying needs on second cars from these Ghanaian second-hand car dealers. It will be a great stimulus for these Ghanaian businesses that employ thousands. The Government should buy these cars for the Police, and a wide-ranging number of other public services. The money spent will be a great boon for these businesses and the economy into the long term. The multiplier effect on the economy will be huge.
To enable this, all car dealers should be organised into custom bonded areas, around the main cities of Accra, Kumasi, Takoradi and Tamale. Government is then able to identify these businesses for planning and programming purposes, particularly the collection of taxes and levies. The custom bonded warehouse regime should be extended to these businesses, allowing them to make the most of their capital in growing their business enterprises and employing more Ghanaians. The extension of the bonded warehouses to these used car dealers, and the many associated businesses will provide visibility of all the economic actors in this value chain. This will allow us to build used car markets that could attract buyers across the West Africa region.
Second hand cars, sold street side across Accra, Kumasi and Takoradi, are an eyesore that spoils the beauty of the cityscape. We are not going to become the cleanest city in Africa anytime if we let this continue. The fiscal incentive of the custom bonded areas should allow city, regional, and national authorities to zone specific areas for second hand car sales. We will be able to clear our many common and pedestrian walkways that have been taken over by used car dealers and return the city to its intended well planned and organised state. This will only go further to boost economic and investment activities.
Let’s adopt these measures and we will have turned a true Ghanaian private enterprise into a full-on engine of growth and prosperity.
The Author, Rev. Kwasi Deh, is the General Secretary of the Ghana Charismatic Conference