What Will it Benefit CBN, If Nigeria Auto Industry Dies?

FEMI OWOEYE

When President Muhammadu Buhari talked about diversification, I clapped. When the government even boasted of reviving the petrochemical as well as the steel rolling mills, I thumped up. For I know these have always been the right way to go, even before our economy went into recess.

Recession was not entirely the making of this government, agreed. But, from one’s observation so far, certain insiders, who President Buhari trusts, might have been planted in government to put spanners against the wheel of government’s efforts to reactivate the recessed economy.

A recent proof was a release which media houses, including Motoring World International published. It was about Central Bank of Nigeria (CBN) releasing over $600 million to Nigerian manufacturers. Auto industry was listed among beneficiaries. We did our story from that angle. I remember an auto assembly plant’s Managing Director immediately sent me an email, asking further questions, which got me suspicions.

In any case, responses we got from the auto industry stakeholders so far seem to be proving contrary to CBN’s claims. I learnt that auto assemblers are not classified as manufacturers, and so are not entitled to benefit from the FOREX released. Excuse me! I hope that is not true. I seriously hope so. Whoever is responsible for that kind of illiterate reasoning is definitely unfit to be part of economic team of a developing economy like Nigeria. If auto assemblers are not classified with manufacturers, where do you classify them? Retailers?

In the first place, the assemblers are here to set up the first phase of auto manufacturing. Starting with SKD (Semi-Knocked Down) 1, they are to graduate to SKD 2 and CKD. Right now, according to National Automobile Design and Development Council (NADDC), the assemblers are getting to local content sourcing/development phase. If the process the Nigerian auto assemblers are following, with the guide of the drafted auto policy cannot be classified with manufacturing, they could as well be told in a plain language, “uproot your conveyor belts and leave the country.”

Afterall, the likes of Dunlop and Michelin relocated their plants and nothing happened. They did not relocate their rubber plantations though. They harvest their rubber from Nigeria, take them to South Africa and Ghana, and make tyres, which they import back to Nigeria for sale, action which contributes negatively to our economy. Think about it. It’s not funny at all.

Or is it the CBN that is playing some funning games? Agreed, the auto policy was designed during the former “corrupted” regime. But since governance is supposed to be a continuum, President Buhari’s government did well by indicating its support for the auto policy through the Minister of Trade, Industry and Investment.

However, after the stakeholders meeting held in Lagos, where are we? There has been no improvement that one can see. More than 2000 auto industry workers have already lost their jobs. Though unannounced, there is hardly any auto assembly company that has not thrown out its valued workers, who are Nigerians.

Latest of them was Boulos Enterprises. The company’s General Manager confessed to our editorial team last week that his company reluctantly had to ask almost 200 workers to go, workers that they spent resources to train. Imagine that! Why won’t they, when they have had to continuously approach parallel market to source FOREX with which to import kits?

After all many of the so-called assemblers, who in the eyes of the CBN, are not qualified to benefit from government support, are already adding local content to their product. I am aware Boulos does.  So does CBN governor, with all his economic management experience classify that as mere wholesaling or retailing? And so you want to starve them of support until they start making 100% local content of automobile in Nigeria?

quoteOh, fantastic, but how will they get there, when what they produce at the moment are too expensive to compete with imported vehicles, which still flood the country, even courtesy of a body as important as Nigerian Senate?

Come on, President Buhari’s economic team and CBN governor. Get your houses in order. The auto industry still remains one of the largest employers of labour in industrialized world. Almost 2000 parts make up an automobile. Auto industry is not important, because it shuns out automobiles. Parts manufacturers that branch out of it like blood veins and arteries to the human heart are the meat of the matter. And that is what should be the target of any responsible modern government.

Femi Owoeye, Editor-in-chief, Motoring World International

Femi Owoeye, Editor-in-chief, Motoring World International

Our auto industry will not get to that level, if at the toddling stage it is at the moment; you classify it as non-manufacturing sector. Such reasoning could be likened refusing feeding, clothing and housing a toddler, because he or she is yet to start working and contributing to the household income, and so classify the child as not being a human.

That sounds silly doesn’t it? Well, there is only one advice I have for this government. Our auto industry was once dead, due to idiotic government policies.

Fortunately, it resurrected, not quite fully recovered though. President Buhari’s regime will be doing this nation a great good by not taking any action or inaction that will arise in second death.

For if that happens, no auto maker around the world will ever take Nigeria serious again. They will rather set up their plants in countries like Kenya and Ghana, as some are already doing.

 

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