A string of the world’s biggest automakers — including Volkswagen, Toyota and Nissan — are investing in vehicle assembly plants in Ghana, helping the country to fulfil its ambition of creating west Africa’s biggest auto industry cluster. 

In August 2018, the Ghanaian government and Volkswagen signed a memorandum (MoU) of understanding to set up a vehicle assembly plant located in the North Industrial Area of Accra, the capital city. In August 2020, the German company unveiled the first models — including internal combustion engine versions of the Tiguan, Passat, Polo, and Amarok pickup — assembled at the plant under the $10.5m first phase. It aims to reach its production capacity of 5000 vehicles a year in the third quarter of 2021. 


Universal Motors, a licensed Volkswagen importer in Ghana since 2005, was awarded the assembly contract under the initial phase. The plant is handling semi-knocked down kit, or kit of partially assembled cars. Covid-19 has delayed the facility’s progress by one quarter, according to the company.

“The Ghanaian government made it clear to us that developing an auto industry was one of its priorities,” says Rochelle Reddy, director of sub-Saharan Africa at Volkswagen. “It is creating the right enabling environment so that the industry can thrive. Political will is very important. Ghana also has a fast-growing economy and is a member of the Economic Community of West African States, which is a fairly progressive trade bloc. It has a central location in the west African market that helps, too. The government’s decision to encourage Ghanaians to buy cars assembled in the country rather than import second-hand vehicles was also one of the key reasons why we opted to invest in the country.”

Moving forward

The second phase of Volkswagen’s programme in the country is expected to produce up to 20,000 vehicles annually and will involve a further investment of $22m. The car maker envisages a regional value chain of auto parts manufacturing emerging in the west African region. Cars would be assembled in its facilities in Ghana, but components could be made in neighbouring countries such as Côte d’Ivoire, Burkina Faso and Togo. 

Ghana is the fifth Volkswagen vehicle assembly location in sub-Saharan Africa after South Africa, Kenya, Nigeria and Rwanda. The company would also like to establish a facility in Nigeria, but says its government has not demonstrated the same level of political will as the Ghanaian one, as its National Automotive Industry Policy Development Plan has not been passed by the country’s senate. 

This year, Sinotruk, the Chinese large-truck maker, also started to produce trucks in Ghana. Toyota is scheduled to start assembling vehicles, including its Hilux pickup, at a facility in the city of Tema in the last quarter this year.


Nissan says it will establish a production plant in the country before 2022, and is expected to produce 50,000 to 60,000 vehicles per year at full capacity. In August 2019, Suzuki also signed an MoU with the government to begin assembling in Ghana. In January 2019, Renault, the French automobile giant, expressed its interest in opening a plant in the country, although it has not yet signed an MoU. 

Local companies

Furthermore, Ghana has an indigenous car maker, Kantanka, which was founded by the Ghanaian entrepreneur, Kwadwo Safo Kantanka, in 1994. It assembles complete knock down kit, or kit of entirely unassembled car parts, and is seeking $100m from investors so that it can expand its production facilities. 

“Ghana does have some local business people who have been assembling cars in the country for a while,” says Andrew Akoto, head of advisory at KPMG Ghana. “The country also has a track record in manufacturing car components, which means a skill base already exists that original equipment manufacturers in the auto industry can draw upon.”

In August 2019, the government announced the Ghana Automotive Development Policy, which has a key objective of making the country a fully integrated and competitive industrial hub for the automotive industry in west Africa. It wants to leverage a new continental free trade deal to become the region’s main auto cluster.

Under the policy, a five-year tax holiday is available for producers partially based in Ghana, while companies building complete vehicles in the country are eligible for a 10-year tax holiday. The import duties for new and used vehicles will be raised from the current 5%–20% range to 35% in November to encourage the purchase of locally-assembled cars.

Furthermore, from October, a new law will prohibit Ghanaians from importing cars that are more than 10 years old.

Driving growth

The vehicle assembling and automotive industry is one of the 10 strategic anchor industries that the government is developing to serve as new pillars of economic growth and to diversify the economy away from traditional industries, such as cocoa, gold and other mineral resources. A longer-term vision for the automotive industry includes the development of an integrated local manufacturing value chain.

Last year, the country enacted an Iron and Steel Development Authority Act, under which a body responsible for overseeing the extraction and local refining of iron and steel deposits should be established by the end of 2020. Output from refineries is largely intended for use in the production of automotive parts.

Once the new policies have been fully implemented and elements such as vehicle financing are in place, Ghana could have a capacity for 300,000 new cars a year, according to Volkswagen. 

“Many African governments pay lip service to economic diversification and to industrialisation,” says Martyn Davies, managing director of emerging markets and Africa at Deloitte. “However, the year 2019 was a significant one for Ghana because the country’s government decided to be highly proactive and put in place a national development strategy for the auto industry. For an automotive sector to take hold in a country, the government must significantly regulate the importation of vehicles and that is something that Ghana is now doing.”

Ghana has one of the most proactive governments in sub-Saharan Africa and is positioning itself well as the west African gateway for original equipment manufacturers in the auto industry. 

This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here