Importers of second-hand cars in Ghana are encountering a substantial financial hurdle due to the government’s policy of levying import duties in US dollars.
Eric Boateng the president of the Automobile Dealers Union, highlighted the impact of this practice on the car import business.
In an interview with Bernard Avle on the Citi Breakfast Show on Wednesday, May 15, Mr. Boateng explained that while the prices of certain cars remain consistent on the international market, the imposition of duties at the port, especially in dollars, significantly impacts the car business in the country.
Even the COVID… they said there is no more COVID but we are paying COVID levy, COVID transfer levy, network charges, and a lot of import duties we are paying currently. Our currency is in Cedis but if you import the car from maybe Canada, Korea or Dubai, the government of Ghana will convert the duties into dollars for you to pay.
“… So, if you buy a car from the USA for about $1000 and you bring it to the port, you will end up paying five times that in dollars,” he stated.
Meanwhile, the practice of charging import duties in dollars contradicts the provisions of the Foreign Exchange Act of the Bank of Ghana, Act 2006 (Act 723), which prohibits unauthorised dealings in foreign currency by the public.
Currently, a dollar is selling at GH¢14.90 on the forex market, which is significantly up from the GH¢10.97 it was sold for the same period in May 2023.
Bloomberg reports that the Cedi’s depreciation is being exacerbated by a decline in cocoa earnings as exports fell by about $500 million in January and February 2024 due to poor weather conditions and the swollen shoot disease.
The Bloomberg report added that the current depreciation depicts the Cedi’s record-breaking weakening cycle that has left analysts to forecast worse times for the currency over elevated risks of election-year funding and stalled debt deals.
Fitch, however, forecasts that the Cedi will end 2024 at GH¢12.25 to a dollar.