No country can attain the desired economic growth and development without a strong automobile industry, as its contribution to employment generation cannot be overemphasised.
Our discussion this morning is to highlight the challenges and opportunities in the Nigerian automobile industry.
Despite the potentials in the Nigerian market buoyed by rising middle-class and a population of over 170 million, the country still lag behind South Africa in terms of motor vehicles and assembly contribution to GDP.
Recent data released by the National Bureau of Statistics (NBS) show the motor vehicles and assembly contribution to the manufacturing sector was 0.8 percent, while it supported the economy by 0.4 percent.
In South Africa, the automotive industry contributed 6 percent to GDP and accounted for 12 percent of the country’s manufacturing exports, making it a crucial part of the economy. In 2010, over 271,000 vehicles were exported.
Nigeria auto industry has been facing challenges that have been crimping its growth potentials.
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Such impediments are: disparity in tariffs, external competition, high production costs, inaccessibility finance, absence of functional industrial clusters for production of automobile, and lack of modern technology.
The country has become a dumping ground for all sorts of cars. Today, Nigeria imports 450,000 used vehicles per annum and 50,000 new vehicles, a situation that calls for concern as foreign exchange earnings are lost to capital outflows.
It must be noted that at the global level the automobile industry has shaken off the effects of the global financial crisis.
Federal Government of Nigeria automobile policy, if meticulously implemented, will lead to economic growth and development. Its multiplier effects will be felt by the steel and tyre industry and companies in the production of rubber.
With a 20 percent drop in imported cars in the first six months of 2014, the new auto policy may have started yielding fruits.
Patrick Atuanya and Bala Augie
