As the saying goes, Great men believe in cause and effect. It is also a well-known fact that looking unconcerned at vital issues (affecting the livelihood of the masses) is not a trade mark of any visionary state.
With this in mind, we undoubtedly agree that governments of the various nations we admire and adore today (for which many go far lengths to obtain VISAs) took consistent and conscious steps to heighten their global status.
Rome was not built in a day, neither was it built by indecision. It took the bravery of intellect, the bulging limits of muscle, the genius of authority and the approving faith of the people.
Till date, Foreign agents have dominated the African economic territory. The differences in conditions does not stem from supernatural factors. Let it not be said either, that any of the geographical areas lack the required talents to develop.
Truth be told, it’s a rather simple matter. Almost all research investigating the hunchback status of science and technology in Africa, lead to this same conclusion. African governments prefer speeches to actually taking supplementary action.
In this article, we will dive into the actions taken by some of these nations to save their automotive industry.
i. Automotive industry as used in this article refers to the local automotive industry
ii. The following details contain actual funds and bills garnered to promote the motor industry of the various countries.
This area has particularly been chosen because of the following:
1. Apostle Dr Kwadwo Safo of Ghana, popularly known as the Star of Africa, has announced that come May 2014, his company, Great KOSA Ltd, will commence the commercial production of the Kantanka branded cars. For the last 33 years, the Apostle has been manufacturing various items from guitars to vehicles, airplanes and rockets but the government is looking unconcerned.
2. In a development seeking nation like Ghana, with its graduates swimming in the harsh unemployment pool, supporting the local automotive industry can create many jobs and lessen the unemployment load.
3. With the Ghana cedi depreciating against major trading currencies like the dollar and pound sterling, it is advisable that the government supports Apostle Dr Kwadwo Safo who uses many local materials in the manufacturing of his products. Also, strategically, such grand technological projects can contribute massively in our quest to even out the cedi.
4. We all know the benefits we would derive if the country becomes less dependent on foreign countries that even have fewer natural resources than we have.
We will drive you though the actions taken by some countries to ensure that their automotive industry survived to achieve the juicy benefits it provides.
Realising the importance of the automobile industry to the nation, the government of Australia has legislated three billion US dollars ( $3,000,000,000.00 ) to support the industry from 1 January 2011 to 31st December 2020.
Aside the above assistance, the Australian government added $47 million which was used between 2012 and 2013 to support initiatives that assisted the automotive industry develop new business opportunities domestically and internationally.
In 2008, the Chinese government reduced automotive taxes in the country. This action of the government was aimed at assisting its automotive industry to spur flagging sales. They achieved their aim which they had deliberately planned knowing the importance of the automotive industry to China. For example, in January 2009, a year after, the Chinese auto-manufacturer Chery Automobile Co. Ltd, headquartered in Wuhu, Anhui, China, reported unprecedented monthly sales.
The State Bank of India reduced interest rates on automotive loans in February 2009 to help the industry stand firm. This helped the car manufacturing companies to acquire softer sources of financing which would obviously lead to the production of affordable cars because of less financial commitments. One of the companies that benefited most from this support was Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company), an Indian automotive manufacturing company headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group.
Like the Great KOSA company of Ghana founded and headed by Apostle Dr Kwadwo Safo Kantanka, the Star of Africa, Tata Motor company are into the manufacturing of vehicles, construction equipment and military cars.
This and other strategic and conscious action from the government through the State owned Bank of India helped Tata Motors to produce affordable cars of which Tata Nano is well known internationally.
Fiat SpA (Fabbrica Italiana Automobili Torino), the parent company of the Fiat Group, was facing severe financial challenges that made it shut down one of its major plants, Pomigliano d’Arco, which was responsible for the production of the company’s Alfa Romeo cars. Being unable to resolve the issue, it announced on December 16, 2008, that it would further extend the closure of the plant.
Knowing the importance of Fiat SpA to Italy, the government quickly step in to support not only Fiat SpA but the Italian automotive sector. This action by the Italian government helped a lot.
On February 20, 2009, Fiat announced that the plant would be opened to resume operation.
When the Russian government saw that its automotive industry was falling, it immediately took measures to assist.
In late 2008, the Russian government introduced measures, worth $5 billion, to improve the situation in the industry. This included $2 billion’s worth of bailouts for troubled companies and $3 billion credits to buyers of Russian cars.
Prime minister Vladimir Putin described the move as vital in order to save jobs. The tariffs for imported foreign cars and trucks were increased to a minimum 50% and 100%, respectively. The tariffs, which were linked to engine size of the vehicle, were to give the Russians cars a competitive advantage on their soil.
Additionally, the Russian government introduced a car scrappage scheme in March 2010. Under the scheme, buyers of new cars could receive a subsidy which is 600,000 Rubles ($20,000) at maximum.
These approaches by the Russian government paid off. In the second quarter of 2010, Sales of Russia’s largest carmaker, Avtovaz ,doubled and the company returned to profit.
Spain, Sweden, United Kingdom, United States, Canada and all car producing nations have witnessed their governments stepping in to support their car manufacturing companies. Why can’t our government do the same?
Ghanaians are tired of the speeches and promises. What we need is a bold pledge in terms of parliamentary bills and smooth financial push to support this worthy course.
After reading all this, one question comes into mind “What is the government of Ghana doing to support its talented citizens like Apostle Dr Kwadwo Safo who is venturing into the automotive industry?”
Good Question, yet the answer does lie with the authorities.
By Emmanuel Ninson, MSc Accounting, United Kingdom.