Nigerian Automobile Policy: Saving The Billions in Our Coffers

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Nigerian Automobile Policy: Saving The Billions in Our Coffers
Nigerian Automobile Policy
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Eniola Abidoye

The Nigerian Federal Government may be losing not less than $100billion annually to the internal sabotage of personnel within the automobile industry thus stifling the Federal Government’s automobile policy. This loss may be due to what appears to be a lopsided automobile policy that is setting major stakeholders along the lines of discontent. This is more so critical now as the country is making every attempt to get out of the economic recession it founds itself due to the global plunge in crude oil prices.

It must be recalled that the ECOWAS Ministers of Industry have adopted the automotive industry as one of the four priority industrial development areas. The others being agro-processing, pharmaceuticals and construction. The ECOWAS Commissioners for Industry are now developing a strategy for the development of the automotive industry in West Africa. The objective is to have vehicle assembling operations with increasing local content incorporation. The transition from one stage to another should not exceed 12 months (i.e. a maximum of 36 months from start of Semi-Knocked-Down (SKD) to Completely-Knocked-Down (CKD) operations including 12 months set-up period).

On the site of the National Automotive Design and Development Council, it was noted that the national automotive policy was re-launched in 2013 and a definite plan for implementation, NAIDP, was announced with very clear fiscal guidelines and programs to run, initially for 10 years with a periodic phased reviews. Its main objective is to bring back vehicle assembly operations and develop local content, thereby making Nigeria a vehicle manufacturing nation.

The current status of implementation of the policy is that the 14 existing assembly plants like VON, PAN, Innoson, Anammco and Leyland-Busan have started assembling new products in 2014, and new ones were established, assembling the following: Nissan, IVM, Peugeot, Hyundai, Honda, Kia, VW, Ford, Changan, GAC, Cars, SUV and light commercial vehicles; Hyundai, IVM, Nissan and Ashok-Leyland buses; MAN, IVM, Sino, Shacman, MAN, FAW, Aston, Foton Forland and Isuzu Trucks; and Proforce armoured vehicles. The total installed capacity is over 300,000 units per annum.

However, analysts and stakeholders in the industry are of the opinion that if nothing is done urgently to review the automobile policy as it is presently, the country may be losing huge amount of revenue that would have helped in this present economic situation.

Less than 20 percent of vehicles were actually assembled or even coupled together in Nigeria because 20 percent of the components of the automobiles are from Nigeria while 60 percent are from Europe, Asia and America but no account was made of the remaining 20 percent thus giving rise to the possibility of smuggling of the parts into the country. He pleaded with the Federal Government to provide a level playing ground for sector players to compete with their peers globally because presently, there are a lot of job cuts in the sector. More worrisome is the announcement by the Director- general of National Automotive Design and Development Council (NADDC), Mr Aminu Jalal that “Nigeria’s import duty is 10 per cent for commercial vehicles and 20 per cent for cars and right now, complete knock downs are being imported at 5 per cent. When the duty was introduced in 2005, many companies closed down. If we do not change this tariff structure, then forget about any Made-in-Nigeria vehicle because nobody will invest in the sector”.

Some analysts have blamed the crisis in the sector on internal sabotage. According to them it is the people working in the various assembling plants in connivance with Federal officials that usually rush off to buy products that were purportedly coupled in Nigeria but in most cases, the cars were brought in almost as whole vehicles under the same tariff arrangement for the completely-knocked down parts or the semi-knocked down parts thus making the government to lose a colossal amount of money.

While the worth of vehicles brought into the country yearly was put at well over N200billion, it was however difficult to know how much the Federal government was losing save for estimation based on the issues identified.

It is difficult to determine a porous border as only a particular community by the border can know this, for example a particular road can have several other outlets to it. It is unfortunate that there are a lot of discrepancies with documentation as most motorists submit fake papers in connivance with some officials across the various authorities.

In view of these, the approaches of Federal Government officials in handling these issues particularly now that the country needs all it can get in terms of revenue to revive the nation’s economy must be reconsidered.

According to the National Bureau of Statistics’ latest GDP data, motor vehicles and assembly output rose from N11.3bn (US$370.5m) in the third quarter of 2013 (at 2010 constant prices) to N14bn in the third quarter of 2014, but then fell to N8.3bn in the third quarter of 2016. The subsector shrank by 33.3% in July-September and was the worst decline in the manufacturing sector.

With these statistics which appear not in favour of Nigeria, it is now imminent for the federal government to take a holistic look at these policies, engage the stakeholders and possibly save the economy billions from the abuse of these policies by the disgruntled elements.

Eniola Abidoye is a communication and public affairs analyst.

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