With Nigeria’s economy still struggling to improve, Original Equipment Manufacturers (OEMs) estimate that investments into the local assembly of vehicles and development of spare parts clusters the country, if pursued vigorously, are capable of contributing about $5billion into Nigeria’s economy.
The projection is based on the total number of vehicles that would be assembled and sold locally and output of other auto spare parts manufacturing industries that may spring up as a result of such industry-related activities.
Jeff Nemeth, chairperson, African Association of Automotive Manufacturers (AAAM) told BusinessDay in George, South Africa during the launch of the Ford Ranger vehicle for the sub-Sahara Africa market, that Nigeria has all the potentials to be an export hub if certain strategic policy measures are pursued and vigorously implemented.
Nemeth disclosed that fcusing on driving investments in infrastructure, skills development, promotion of investor friendly regulatory frameworks and sustainable resuscitation of other ancillary and moribund iron and steel manufacturing industries in Nigeria would contribute significantly towards this goal.
“This will make new vehicles more affordable, boost the industrialisation of the economy and lead to the growth of middle income households, which will be the main driver for new vehicle sales,” Nemeth says.
“To unlock this market potential will require greater government and private sector partnerships to develop a formal legislative environment that is conducive to longer-term growth. It needs a more robust automotive strategy that promotes a sustainable and stable environment in support of local manufacturing operations,” Nemeth says.
The development and promotion of a cohesive automotive strategy for the African continent is gaining new impetus due to the strategic vision and guidance of the African Association of Automotive Manufacturers (AAAM) and governments of strategic countries.
He revealed that outside of South Africa, which has a well-developed world-class automotive industry, Nigeria is recognised as a strategic market over the long term due to its demographics.
According to him, although Nigeria is recognised as Africa’s largest economy, the automotive sector is relatively small, with an estimated 44 vehicles per 1,000 inhabitants, according to Deloitte Africa’s Automotive Insights, published in April 2016.
According to him, although Nigeria is recognised as Africa’s largest economy, the automotive sector is relatively small, with an estimated 44 vehicles per 1,000 inhabitants, according to Deloitte Africa’s Automotive Insights, published in April 2016.
Only recently, a delegation from the AAAM, led by Nemeth visited Nigeria for top-level engagement with government and industry.
During the visit, there were high-level discussions with President Muhammadu Buhari, along with government ministers and representatives from Nigeria’s National Automotive Design and Development Council (NADDC) and the National Automotive Manufacturers’ Association (NAMA).
The talks betwwen OEMs and the Federal Government, he told our reporter, were intended to create the framework for policy development to support the growth of the local industry.
Aminu Jalal, director-general, National Automotive Design and Development Council ((NADDC) revealed at the last stakeholders forum in Lagos that about 400,000 vehicles comprising 100,000 new and 300,000 used vehicles, valued at over N550bn ($3.451bn) were imported into Nigeria in 2012.
At full capacity, the Nigerian automotive industry has the potential to create 70,000 skilled and semi-skilled jobs, along with 210,000 indirect jobs in the SMEs that will supply the assembly plants. Furthermore, 490,000 other jobs would be created in the raw materials sector.
AAAM was inaugurated November 2015 by founding members BMW, Ford, General Motors, Nissan, Toyota and Volkswagen, focusing on key markets of the African continent.
“The aim of the African Association of Automotive Manufacturers is to unlock the economic potential of the African continent by promoting a policy environment that is conducive to the development of the automotive sector,” says Nemeth.
“The aim of the African Association of Automotive Manufacturers is to unlock the economic potential of the African continent by promoting a policy environment that is conducive to the development of the automotive sector,” says Nemeth.
As the African continent becomes increasingly important within the global economy, it is crucial that we develop an auto sector strategy backed up by incremental investments in infrastructure, skills development and in-market localisation programmes.
MIKE OCHONMA in Pretoria,S/Africa
