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Abossey Okai in Accra is a hub of auto spare parts in the country
Abossey Okai in Accra is a hub of auto spare parts in the country

Harsh economic conditions affect businesses at Abossey Okai

About 30 per cent of Abossey Okai spare parts dealers in Accra have closed down their shops as a result of the harsh economic situation that has existed in the country over the years.

The Chairman of the Association of Used Auto Parts Dealers (ASUAPAD), Mr Sammy Siaw, told the Graphic Business in Accra that the economic situation had been so dire that no month passed without many of the shops recording huge losses.

“Majority of the spare parts dealers at Abossey Okai had diverted into other trades, leading to the closure of about 30 per cent of shops within the enclave,” he said.

“This business used to be very profitable, but it is getting worse by the day,” Mr Siaw, who has been working at Abossey Okai, indicated.

High import duties

The chairman explained that high import duties, the fast depreciation of the local currency against the US dollar which had led to the increase in prices of spare parts, had resulted in low sales, making the business less attractive over the years.

He specifically mentioned the tax stamps, three per cent flat Value Added Tax (VAT) and the Common External Tariff (CET) that were implemented across the ECOWAS sub-region.

Beyond that Mr Siaw said the association would expect the incoming administration to help cut out the influx of foreigners into the retail market.

“Also, the poor performance of the cedi against major foreign currencies, coupled with the high interest rate, are some of the challenges affecting the survival of our business,” he said.

Abandoned trade

Consequently, the chairman said majority of the spare parts dealers at Abossey Okai had diverted into other businesses, leading to the closure of about 30 per cent of shops in the area.

Should the Nana Akufo-Addo government succeed in eliminating these challenges, Mr Siaw said businesses would not only be able to reduce their prices but would also create employment for the teeming youth.

Some of the traders were hopeful of a stable business environment in 2017, given the policies proposed in the manifesto of the NPP.

The NPP promised to remove import duties on raw materials and machinery, review the VAT imposed on micro and small enterprises from the current 17.5 per cent to a flat rate of three per cent as well as scrap the 17.5 per cent VAT on imported medicines.

The party also proposed in its manifesto to reduce the VAT on domestic airline and real estate sales.

Visit to Abossey Okai

A visit by the paper to Abossey Okai on December 19 showed very little economic activity, although most markets across the country were recording substantial sales.

The shops are experiencing massive sales downturn. While some of the spare parts dealers have closed shops as a result of the downturn, others are hopeful of brighter days ahead.

The traders explained that the vehicle parts market, which is referred to as the hub of the spare parts business in the country, houses over 15,000 shops with each shop employing an average of two persons. This brings the total population in the area, which is almost the size of two standard football fields, to about 30,000 people.

Traders complained that since January their sales turnover had dropped by about 70 per cent partly due to high cost of living, and the difficult economic situation in the country.

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