Investors urge Government to tackle high taxes impacting automotive sector
In a bid to address the challenges posed by high taxes in Ghana’s automotive industry, investors are urging the government to explore various options that will alleviate the burden on their businesses. The impact of these taxes is particularly felt in the cost of operations associated with importing components for vehicle assembly within the country. As a result, stakeholders are calling for proactive measures to attract investors and stimulate growth within the sector.
Kassem Odaymat, Chief Operations Officer of Rana Motors, voiced concerns about existing gaps in policy within the automotive industry during an interview on the prestigious AM Business Show. He emphasized that while the prospects for the industry are positive, there is still work to be done to make Ghana an attractive destination for investors.
Odaymat pointed out that the automotive business in Ghana extends beyond mere vehicle assembly, encompassing various components such as tires and car batteries. Therefore, any introduction of taxes has a ripple effect throughout the industry, impacting the entire value chain. These tax burdens create challenges that hinder the growth and profitability of automotive businesses.
While acknowledging the unfavorable economic climate, Odaymat remained optimistic about the potential of Ghana’s automotive industry. He stressed the need for a comprehensive review of existing policies to identify and rectify gaps that are deterring investment. By doing so, Ghana can establish a conducive environment that will attract both domestic and international investors, further bolstering the industry’s growth trajectory.
In a bid to attract global automakers such as Volkswagen AG and Nissan Motor, the Ghanaian government unveiled plans in 2019 to offer tax breaks of up to 10 years for those establishing local manufacturing plants. This strategic move aimed to replicate the success seen in other African countries, where tax incentives have enticed prominent manufacturers like Renault, Nissan, and Toyota.
The implementation of these tax breaks reflected the government’s commitment to promoting local production and encouraging foreign direct investment. However, the concerns expressed by industry players underscore the need for ongoing evaluation and adjustment of Ghana’s tax structure and policies. This proactive approach will ensure that the automotive industry can thrive in an increasingly competitive global market.
Safeguarding the future of Ghana’s automotive sector requires a comprehensive approach that goes beyond tax incentives. Policy reforms, targeted infrastructure development, and investment in research and development are key areas that demand attention. By nurturing a holistic ecosystem, Ghana can position itself as a hub for automotive manufacturing, fostering innovation, job creation, and economic growth.
Furthermore, the success of the automotive industry in Ghana is not only contingent on attracting investors but also on creating an enabling environment for local businesses. Strengthening linkages with local suppliers, investing in skills development, and facilitating access to financing will empower local enterprises and promote their participation in the value chain.
As Ghana’s automotive industry faces the challenges associated with high taxes, it is crucial for the government to heed the calls of investors and industry experts. A comprehensive review of policies, coupled with proactive measures to attract both local and international investors, will pave the way for sustainable growth and establish Ghana as a prominent player in the global automotive market.
Ghana’s automotive industry is seeking government action to address high taxes that are adversely affecting their operations. The call for action reflects the industry’s determination to overcome challenges and attract investment. By creating a favorable business environment, Ghana can unlock the full potential of its automotive sector, promote economic growth, and position itself as a regional leader in the industry.
