Whither Nigeria’s Automotive Policy

By David Ogah   |   15 November 2015   |   2:51 am  

Auto-shopDismal Output, Only 15,000 Cars Per Annum
Nigeria has issued about 36 Auto assembly licenses to kick-start automobile production in the country, but according to the National Automotive Council (NAC) only three of them are said to be in operation. Others are in existence only in name; the situation, which made the council to stop the issuance of further licenses despite the increasing demand by, would be new entrants. The council said it would give new licenses to auto firms willing to go into manufacturing of parts to feed the main plants with local content.

Before now many Nigerians have criticised the implementation of the new auto policy, saying the implementation is too hasty. They argued that the import prohibition and the increase in tariff on imported vehicles from 35 percent to 75 percent, when the assemblies have not started to roll out their products, is uncalled for and makes no economic sense. They advocated for gradual prohibition of auto product so as not to make life unbearable for Nigerians. Their point is that you can not ban the product or make it impossible for people to acquire when the government is yet to provide alternative source of such acquisition and at competitive price

At a symposium and luncheon of the Automobile and Allied Products Group of the Lagos Chamber of Commerce and Industry in Lagos recently, a popular auto dealer, Chief Ade Ojo said the country’s auto policy was put in place and implemented without proper planning.

“The policy must be executed very well. With the new government, things have been slowed down for everybody to run faster in the future. An industry, like auto industry, needs proper planning. We cannot sit down and say in two years, we want to have an assembly plant that will produce our auto requirement in Nigeria. The pretentious assembling that is going on now cannot help us. It is meat to favour some people. We must put in place ancillary industry to be able to say we want to create 70,000 jobs. We have to sit down to plan the way forward. The necessary things that we need to do have not been done. I do agree that Nigeria is a potential auto hub in Africa, but we need to do the necessary planning for an industry that is capable of employing millions of Nigerians. We cannot start the way we started. It is time for us to sit down to plan. Those that gained from the emerging situation and others must sit down and plan. I have been in business for 40 years, and at my age, I will not deceive you. The preparation must be made. The foundation must be strong, if it is weak, it will crumble. This is the most qualified country in Africa for industrilisation, but those who want to bring in their money must be assured that they are not going to waste the money. We must build better roads, we must develope the railway and water transportation system,” he said

A partner at Pricewaterhouse Coopers, Dr Andrew Nevin, who was the guest speaker at the symposium, raised the hope for Nigeria, when he said the country could become thee 9th largest economy in the world by the year 2050, surpassing Germany and France.

According to him, South Africa is presently producing 88 percent of its auto need locally, adding in Nigeria, the automobile industry is dominated by used vehicles with little local production.

Predicting the bright economic prospect for Nigeria, he said, by 2050 the population would surpass that of the United States, hence the need to address certain gaps now to achieve the potential of becoming the automotive hub of Africa. For Nigeria to get to that point, Nevin urged her to improve the chance of owing cars by Nigerians, tightens the borders, protect the consumers, set up ancillary industry and build human capacity in the auto industry.

It was revealed that while Morocco has only two assembly plants with 460,000 units of production capacity, Egypt has 26 assembly plants with 325,000-production capacity, and Nigeria allegedly has 36 assembly plants with only 15,000-production capacity. They therefore concluded that there is proliferation of licenses for assembly plants that are not operational

According to the National Automotive Council, no fewer than 30 new assembly plants have either indicated interest to participate in the evolving auto industry, or had already commenced production or are at various stages of setting up, while many others are still carrying out feasibility studies.

The New policy has, no doubt, attracted new entrants into the auto industry, including Innoson Vehicle Manufacturing Co. Ltd, ANAMCO, LeylandBusan, National Trucks Manufacturers, PAN Nigeria LTD, Proforce LTD, ScoaNigeria PLC, Steyr Nigeria LTD, Stallion Nissan Motors Nigeria LTD, VON Automobile Nigeria LTD and Dana Motors.

Others are Sino trucks LTD, Hyundai Motors. Nigeria LTD, Nigeria–China Manufacturing Company LTD, Honda Automobiles West Africa LTD, and few others.

One of the reference points, as far as the success story of the policy implementation is concerned, is the reviewing of the Kaduna plant of PAN Nigeria. The Peugeot maker and its technical partner, AP of France had parted ways years ago. But with the introduction of NAIDP, there was new approach that led to the resurgence and production at the plant.

Although, the policy has attracted marginal investment to the auto sector, there is no corresponding investment in the local component-manufacturing segment, which is very critical to the success of the policy. More than 95 per cent of the firms, which were issued licenses to assemble vehicle are still keeping their licenses, waiting for a clear policy direction of the Federal Government

Stakeholders in this segment said funding was paramount for the revival of the comatose component manufacturing companies.

The Chairman, Motor and Miscellaneous Assembly (MMA) sectorial group of the Manufacturers Association of Nigeria, Chief David V.C. Obi said recently that the `sector had been comatose for over 17 years, adding that efforts are on to revive it.



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