President John Dramani Mahama has announced plans to make tax incentives for vehicle assemblers conditional on meeting a minimum level of local production.
The policy is intended to ensure that companies benefiting from government exemptions contribute more substantially to Ghana’s manufacturing sector rather than importing almost-complete vehicles for minimal assembly locally.
President Mahama announced the planned requirement on Tuesday, September 15, during the commissioning of Phase Three of the Zonda Tec Ghana Limited vehicle assembly plant at Tema Golf City.
He said the Ministries of Finance and Trade, Agribusiness and Industry were finalising a new incentive framework for semi-knockdown vehicle assembly.
Under the proposed framework, manufacturers would have to meet a specified percentage of local assembly before qualifying for VAT exemptions.
Mahama said the policy was intended to prevent companies from benefiting from tax incentives while carrying out only limited assembly work in Ghana.
He also called on vehicle assemblers to increase the use of locally produced components, including batteries, tyres, wiring harnesses, seats, glass, plastics and metal parts.
According to the President, deeper local production would strengthen domestic supply chains, create jobs and ensure that more value generated by the automotive industry remains in Ghana.
He said details of the new incentive regime would be incorporated into the national budget, which the Ministry of Finance is expected to present to Parliament.
The government also wants the automotive sector to move beyond vehicle assembly towards an integrated industry capable of producing components and vehicles for both the Ghanaian market and export to other African markets.
Trade, Agribusiness and Industry Minister Elizabeth Ofosu-Adjare said the commissioning of Zonda Tec’s third assembly plant had increased the company’s annual production capacity to about 3,000 heavy and light vehicles.
She said the expansion strengthened Ghana’s position as an automotive assembly hub in West Africa and supported the government’s industrialisation and job-creation agenda.
The new policy would therefore shift the focus of government incentives from simply attracting vehicle assembly operations to achieving greater local value addition, technology transfer and development of Ghanaian suppliers.