Automotive Industry Development Plan in Nigeria: Wobbling and Fumbling 

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The Nigerian domestic automotive production began in the 1970s through partnership between the Nigerian government and foreign companies as at then. Six assembly plants (two for cars and four for trucks) were established in 1970-1980. These were: Peugeot Automobile Nigeria Limited (PAN) in Kaduna, Volkswagen of Nigeria Limited (VWON) in Lagos, Anambra Motor Manufacturing Limited (ANAMCO) in Emene, Enugu, Steyr Nigeria Limited in Bauchi, National Truck Manufacturing Limited in Kano for Fiat, and Leyland Nigeria Limited in Ibadan.

 

Either due to underestimation of technological changes of the time, or lack of foresight on the impact of emerging technological revolution on automotive industry, the assembly plants in Nigeria were of low quality and became uncompetitive shortly after their establishment.

 

The automotive industry is one of the most sensitive sectors of the economy. It occupies a critical position in the national and global economy. By rolling out a policy statement on this important industry, it is assumed that the federal government had done a thorough investigation and is politically committed to pursuing the project.

 

In the 1980s, there was increased demand for smaller and technologically advanced cars worldwide. Industry analyst, Crusoe Osagie, is of the view that the Nigerian government and its foreign partners should have put major investment to reconfigure the plants to meet changing needs. Unfortunately, this period coincided with the infancy of the Nigerian automotive industry, which was struggling for investment recovery. The decision to put more investment on an already failed project proved very difficult, especially for foreign companies.

 

The development experts under the former President Goodluck Jonathan administration, expressed disdain for economic policies that depend on importation of automobile goods. Therefore they advocated an economic option that encourages local production, including car manufacturing. This is a very gladdening development.

factors that contributed to the failure of the Nigerian automotive industry include the disappearance of the middle-class, weak import policy and implementation. The subsequent devaluation of the naira and increased inflation caused high production costs and consequently made it difficult for Nigerians to purchase the Nigerian-made vehicles.

 

Just of recent, the 8 Senate passed the Bill on Nigerian Automotive Industry Development Plan, as part of efforts to transform the automotive industry. This followed the clause by clause consideration of the bill by the lawmakers during plenary in Abuja.

Presenting the report, Chairman, Senate Committee on Industries, Sen. Sam Egwu, recalled that the bill was passed by the 7thNational Assembly but was not signed into law by the President.

Egwu said the bill, when passed into law, would transform the automotive industry and attract foreign direct investment in auto businesses and allied sectors.

“It will also revolutionalise the moribund tyre industry.

“Nigeria once had a strong local tyre production base but for the exit of the Michelin and Dunlop in 2006 and 2009 respectively to Angola.

“Their exit left a void in the market that has resulted in the importation of large volumes of tyres to satisfy growing local demand,” he said. Egwu said the objectives of the bill include developing a sustainable and competitive automotive industry in Nigeria.

“It also seeks to create an environment to allow existing assembly plants to survive and attract other original equipment manufacturers among others,” he said.

The President of the Senate, Dr Bukola Saraki, said the bill when passed, would go a long way in restoring the glory of automotive and tyre industries.

“These companies have left the country. I hope with this incentive, we will start going back.

“This is another way of creating jobs for teaming youths who are unemployed,” Saraki said.

 

With the new automobile policy of semi liberalised industry includes strategic review of old tariff upward for importation of new cars. This is in order to protect national market for local automotive manufacturers. The local manufacturers, on their part, are required to create significantly, good quality employment and a wide range of technologically advanced manufacturing opportunities for Nigerians.

In the new policy, a Vehicle Finance Scheme is to be established to make funds available for Nigerians for the purchase of vehicles. This will involve collaboration of both local and foreign banks to make money available to prospective car owners at the interest of 10 per cent. The rationale for this collaboration is to reduce interest and provide opportunity for Nigerians to own qualitative cars. Repayment would be over a period of four years.  The new policy also emphasizes market development, skills acquisition, backward integration, quality standard of products, as well as automobile component parts, etc.

 

Nigerians may not see anything spectacular about a fine-worded policy statement on automotive industry if there is no action by the federal government. Political will and enabling environment are needed dearly.

 

But the pervasion of automobiles with digital technologies has placed high pressure on car development departments. Added to the pressure of digital technology, the shortening of a car life cycle has created another problem of having to manufacture different models at the same time to meet various needs of special target groups.

 

It is in this complex technology changing time that the new automotive policy in Nigeria is being unveiled.

 

It is advisable that those responsible for the implementation of the new policy should avoid the pitfall of their predecessors by ensuring that high quality assembly plants are provided to make the made in Nigeria cars globally competitive. While quality cars are expected from the assembly plants, automobile manufacturers should design cars that are also affordable to Nigerians and neighbouring countries.

 

One of major challenges to effective implantation of the new automotive policy is the change of government as result of general elections. Successive Nigerian governments, present one inclusive, are good at killing policies and programmes initiated by their predecessors, however good and well-intentioned they may be. The successful implementation of the new automotive policy depends on the outcome of the 2015 general elections since it is impossible to implement this very important policy within a period of one year.

According to Aliyu, the Managing Director of Maker Network and Fair based in Kaduna that the revival of the automotive industry is critical to the economic reengineering of Nigeria and needs the support of all.

He therefore said whichever political party wins elections going forward should support this important project adding that strategies may differ but the goal should be to make the Nigerian automotive industry globally competitive.

“The automotive industry is complex and expensive but very vital for the economic wellbeing of nations.”


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