Ghana Have Factories: African Nation Bans Importation of Old Cars

Ghana has banned the importation of cars older than 10 years in a move designed to attract automotive plants. As a major importer of second-hand vehicles, the West African nation is largely dependent upon cars discarded by other nations. However, the country’s leadership wants it to become an automotive hub for at least a healthy chunk of the continent. This is a relatively new yet persistent dream for the nation, and it includes a bizarre roster of characters we don’t quite know what to make of.

Ending the importation of older models (sort of a reverse Imported Vehicle Safety Compliance Act) isn’t the only big change taking place in Ghana, however. According to Bloomberg, there are sweet deals being laid out for manufacturers to peruse:

The new law also provides import-duty rebates for companies that manufacture or assemble cars in Ghana, according to the act of parliament obtained Thursday by Bloomberg. The embargo will take effect six months after the manufacturing or assembling of new vehicles in Ghana begin under a special government program meant to draw investment.

Volkswagen, Nissan, Toyota Motor Corp., Suzuki Motor Corp. and Renault SA are among automakers weighing the local assembly of vehicles in a country where used cars make up about 70 [percent] of vehicle imports. Ghana is seeking to become a car-manufacturing hub for West Africa, a region with more than 380 million people.

The average per capita income in Ghana is a mere $2,200, making automobile ownership a luxury for many. In fact, the country has a fairly robust dealer network that specializes in fixing up old, imported vehicles, and that body has been hesitant to endorse the new rules. Many of the most affordable Ghanaian cars are vehicles that have been involved in accidents that dealers can repair and flip as cheaply as possible. The government has suggested that this is unsafe and included provisions to make the importation of any automobile that has been involved in an accident illegal — regardless of when it was built.

That’s bound to obliterate a large quadrant of the automotive market, potentially creating new troubles for low-income families in need of a car, as well as repair shops. Still, the country’s leadership claims the need for safer vehicles outweighs the financial risks and says this ultimately serves the nation by creating better-paying industrial jobs.

President Nana Akufo-Addo signed the new provisions into law on April 30th; they take effect this October. Assuming automakers play Ghana’s game, this might all turn out to be for the betterment of the nation. If not, we expect unconsidered consequences to surface pretty swiftly. Parliamentary documents pertaining to the rule already estimate the changes costing the country $143 million in customs revenue within the first three years, with fears expressed about the budget-oriented secondhand auto market.

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