Nigeria’s local assembly plants have, in the past decades, remained a shadow of themselves. This is an industry adjudged by many as being capable of producing sufficient vehicles to meet local demand as well as for export.
There is hardly any country in the world doing well economically and industrially without a thriving and viable automotive sector. Great Britain, the United States, Japan, Turkey, France, South Korea, Germany, China, India and Brazil are clear examples.
In Africa, examples of countries embracing the new paradigm have more than average performing automotive sectors. These countries include Tunisia, Morocco, Kenya, South Africa and Egypt, while Nigeria, the ‘Giant of Africa’ and most populous country on the continent, continues to totter.
On October 3, 2013, the Federal Government announced a new auto policy for which implementation started in 2014. Simply put, the policy which was formulated to be achieved under a 10-year period (2013-2023) is aimed at discouraging the importation of brand new vehicles and encouraging local manufacturing.
With the announcement of the policy in 2013 and eventual commencement of implementation the following year, many stakeholders with the local assemblers as major players, saw it as the only way forward for resolving the challenge posed by the high cost of purchasing new automobiles in the country.
According to the policy, Fully Built Units (FBU) attract 35 percent duty and another 35 percent levy, bringing the total to 70 percent as tax to import a fully built brand new car. In the same vein, fully built commercial vehicles attract 35 percent duty without levy. Local assembly plants would import their Completely Knocked Down (CKD) at zero percent duty while the Semi Knocked Down (SKD) attracts five percent duty.
When the policy was fashioned, it was greeted with allegations and counter allegations on non-inclusive consultations with relevant stakeholders, underhand dealings and leakage of the vital and critical elements of the policy. This resulted in the initial rejection and show of no-commitment to the policy by industry players.
At the moment, over 41 licences have been issued by the National Automotive Design and Development Council (NADDC) to vehicle manufacturers to assemble vehicles in the country.
Some of the auto companies and brands that took advantage of the offer, as a consequence of the policy, to show interest in local assembly, included Innoson, Proforce, Sachman, FAW, Ford, Honda, GAC, Nissan, Isuzu, Kia, Hyundai, Peugeot, Ashok Leyland, Leyland and TATA.
These companies took advantage of the policy which permits them to produce one and import two at 35 percent duty. During that period, there were high expectations that with the country’s population size and economic power in sub-Sahara Africa, there would be huge business opportunities for the range of vehicles to be rolled out of the assembly plants.
Often times, owners of these assembly plants have boasted about the durability, cost-effective and built-for-purpose selling points of these locally assembled cars, including their adaptability to the Nigerian road conditions. Apart from all the advantages that go with locally-made vehicles, most of the materials are sourced locally, they are highly fuel-efficient and could be cheap to maintain when parts are locally sourced.
With all the perceived seriousness and purported commitment bandied by the Federal Government in many fora, Nigerians are at a loss as to what is happening with the assembly plants which were set up by the stakeholders in the last few years. ‘
For some of these assemblers that had invested massively into assembling locally,the past four years have been lamentation, as according to them, they are yet to feel the benefits of the policy.
The euphoria that greeted the policy has almost become extinct as disenchantment and outright conviction that the policy will suffer the same ill-fate as the ones it replaced are becoming rife.
Confronted with all the bottlenecks and current challenges, it seems we are back to square one, as inertia and confusion are now the order of the day. To Oseme Oigiagbe, the former chairman of the Automobile and Allied sectoral group of the Lagos Chamber of Commerce and Industry (LCCI), ‘’the implementation of the policy has been that of motion without movement’’
Today, apart from Innoson and PAN that are doing serious auto assembly, there seems to be little or no assembly activities happening in the country since 2015. Analysts say this negative development is connected with the inherent bottlenecks and encumbrances in the system, as well as the change in policy drivers and the general economic downturn which have plagued the nation.
These include pervasive low demand of brand new vehicles, occasioned by decreasing purchasing power of the buying public, persistent economic recession, spiraling inflation, non availability of capital and financial resources to buy new cars, devaluation of the naira against major currencies and lack of access to funds for investment in the sector.
There is high cost of assembled vehicles in the country as a result of lack of access to foreign exchange, high cost of production, availability of cheaper alternatives, especially functional second hand cars.
Other factors include ineffective implementation of government’s policy on buy-Nigeria-made goods and poor state of infrastructure such as electricity, roads, sea and airports.
To cap it all, there is no law backing the policy and a lot of areas in the policy are opaque, with grey imports still flooding the market and the regulatory authorities like the Nigeria Customs Service incapable of making accurate data of imports available.
There is no definite incentive package for local assemblers, while there is an absence of viable component spare parts makers to feed the assembly plants. There appears to be no serious driver of the policy, despite the array of best brains in the Federal Government cabinet since the transfer of leadership from the Peoples Democratic Party (PDP) to All Progressives Congress (APC). The time to act is now.
MIKE OCHONMA
