Hyundai & KIA to set up manufacturing plants in Ghana

Global automobile giants Hyundai & KIA are the latest to unveil plans to set up in Ghana, Minister of Trade and Industry Alan Kyerematen has disclosed.

The two would increase the number of automobile manufacturing companies in Ghana to seven by 2022.

“Pleased to announce that Hyundai & KIA are set to establish assembly plants in Ghana by the end of 2022 to join Toyota-Suzuki, Nissan, Kantanka, Volkswagen & Sinotruck,” Mr Kyerematen said in a tweet.

Pleased to announce that Hyundai & KIA are set to establish assembly plants in Ghana by the end of 2022 to join Toyota-Suzuki, Nissan, Kantanka, Volkswagen & Sinotruck. The Ghana Auto Development programme = 3,600 assembly & 6,600 manufacturing parts jobs in Ghana. #InvestforJobs pic.twitter.com/JMHAmlM5VI

— Alan John Kyerematen (@AlanKyerematen) April 22, 2021

It comes on the back of a deal with Germany to boost the automobile sector.

The Ministry of Trade and Industry and ‘Invest for Jobs’ – an initiative of the German Federal Ministry for Economic Cooperation and Development (BMZ) have signed an agreement to promote the automotive sector and support the development of industrial parks in Ghana.

A ceremony co-hosted by the German Ambassador to Ghana and the Minister of Trade and Industry in Accra marked the cooperation between the two parties.

‘Invest for Jobs’ is the brand for the special initiative on training and job creation.
It is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH among other partners.

The cooperation will contribute to the development of selected industrial zones and parks, in collaboration with local and international parks developers.

An amount of 540,000 Euros is being invested – through a financing agreement, to support industrial park development and to establish an Automotive Desk at the Ministry.

The grant agreement was signed by Ms Regina Bauerochse Barbosa, Country Director of GIZ Ghana, and Mr Patrick Yaw Nimo, the Chief Director of the Ministry of Trade and Industry.

Following the signing ceremony, the German Cooperation presented two vehicles, one each to the Ministry of Trade and Industry, and the Delegation of German Industry and Commerce in Ghana (AHK Ghana) with whom GIZ also has a cooperation agreement.

Both VW Tiguan cars were assembled locally in Ghana.

Through the local assembly of vehicles, 3,600 direct and indirect jobs would be created in Ghana, and the addition of components and parts manufacturing will also add about 6,600 direct and indirect jobs.

The Ghana automobile industry

The automotive sector in Ghana is largely made up of retailers of imported used vehicles and a few distributors 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.