Hyundai and Kia have announced plans to open automotive plants in Ghana by 2022. This was revealed by the Ghanaian Minister for Trade and Investment via his Twitter account. Much as Nigerians are quick to bemoan the choice of Ghana over Nigeria, it appears many are still sore about Twitter’s choice to set up an African HQ in Ghana.
As patriotic as Nigerians are, the reasons for setting up business outside Nigerian shores are many and equally cogent. For instance, Nigeria currently has challenges bordering on insecurity which have made investors skeptical of their ability to generate substantial returns on any investments.
Nigeria also has a visible infrastructure deficiency. This is very clear in areas such as road networks, power generation and healthcare. Due to power challenges, manufacturers are forced to source alternative sources of power to sustain their operations, thus leading to an increase in the cost of their products. Conversely, if this were to be tackled, it would result in lower costs of production, enabling businesses to sell their products at lower prices while passing savings on to the customer.
In choosing Ghana, Kia and Hyundai join the ranks of auto manufacturers with a presence in the country. They join Toyota-Suzuki, Nissan, Kantanka, Volkwagen and SInotruck. This announcement not only establishes Ghana as a manufacturing hub, but also has the potential to lift Ghana’s export of vehicles to the rest of the region.
Although countries like Nigeria have always been considered a market for automakers on account of its large population, penchant for vehicles and a love for the latest car brands-that isn’t nearly enough. One thing that can clearly be learnt from Ghana is its dedication to promoting ease of doing business. The government has also seen an uptick in foreign direct investment into areas such as its medical infrastructure.
Additionally, President Nana Addo Akufo-Addo recently liaised with the Securities and Exchange Commission, Ghana to attract funding for Ghanaian businesses of which over 90% are considered as SMEs accounting for 70% of their GDP. He stated this while giving a keynote speech at the just concluded Annual Conference of the African Private Equity and Venture Capital Association (AVCA).
Nigeria clearly has a long way to go. Recent challenges have included a ban on the sale of sim cards which was just overturned. The federal government is also notorious for changing policy at will, regardless of the outcome to citizens or even the ability to foster economic gain for the country as a whole. The recent cryptocurrency ban is an example. The government needs to clearly demonstrate that Nigeria is serious when it comes to doing business. This is important especially as President Muhammadu Buhari famously courted Toyota prior to their choosing Ghana over Nigeria in 2018.
By Ogodilieze Osaji-Ugo
