Following the ravaging effect of global economies by the coronavirus pandemic that is gradually bringing many businesses to its knees as the Federal Government through the National Automotive Design & Development Council (NADDC) has rolled out a stimulus package for local automotive assemblers.
Speaking with BusinessDay on telephone last Friday, Aliyu Jelani, director-general of NADDC said the council has secured approval from the Bank of Industry (BOI) reducing the interest rate on loans borrowed from it by local beneficiary automobile assemblers by two percent across the board and the deferment of repayment of such loans from the BOI for a period of three months.
The NADDC boss said the approval had been communicated to the secretariat of the Nigerian Automobile Manufacturers Association (NAMA), expressing hope that the incentives would go a long way in reducing the burden on the stakeholders and allow for a smooth, unhindered and continuous growth of the Nigeria automotive sector.
Responding to questions on the modalities of the incentives that will be extended to the industry players and how the NADDC will be able to identify genuine local automotive and allied components assemblers and what shape the stimulus package will take, Jelani told BusinessDay that, “in line with the federal government directives, what we are primarily looking at doing are offering palliatives to those stakeholders that benefitted from the NADDC loans through the Bank of Industry (BOI).
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NADDC says in a letter that the reduction of applicable interest rate by 2 percent is for a period of one year, that is 12 months with effect from 1st April 2020 to 31st March 2021, such that at the expiration of the 12-month period, the applicable interest rate on each facility shall revert to its initial approved rate as stated in each customer’s respective Loan Offer Letter. It said this condition was however subject to the full liquidation of all interest charges as of March 31st, 2020.
It further provides for deferment of principal repayment for three months only in the first instance with effect from 1st April 2020 to 30th June 2020, with allowance to a further extension of between three to nine months based on customer-specific request and justification. “This is also subject to the receipt of a formal application requesting the restructuring and a supplemental bank guarantee (where applicable) from customer’s guaranteeing bank,” the letter said.
Remi Olaofe, executive director of NAMA, confirming the receipt of the approval letter from the NADDC director-general. He also informed our reporter that a letter had also been forwarded to the Federal Ministry of Finance to allow those auto stakeholders whose bonafide licenses had expired or are about to expire in the wake of the dreaded coronavirus outbreak to be given an extended period to clear their consignments from the ports until the economy bounces back, offices resume and the restriction of movements is lifted.
In a recommendation presented to Jelani, earlier in the week by Bambo Adebawale, chairman of the Automobile & Allied sub-Sectoral group of the LCCI, the group requested the NADDC engage with the Nigerian Customs Service to waive the duty on all Fully Built Vehicles and Semi Knocked Down parts shipped before the ports were closed. It also asked that the NADDC should absorb the demurrage costs of goods that had already littered the ports.
It also requested that the Federal Ministry of Finance should extend the vehicle assembly licences that are about to expire and that a zero-interest loan from the NAC fund should be granted to any assembler or dealer that is duly registered, adding that such considerations will encourage registration in the future.
