Nigeria’s automotive industry has been on a life support. As it gasps for breath, a parallel industry made up of unlicensed operators are bouncing with life. The industry exists in a ghost form, yet very active.
Contrary to the provisions of the nation’s auto policy, operators of the said ghost auto industry run outside approval of the National Automotive Design and Development Council (NADDC), yet they are in full operation in all the Nigerian geo-political zones, all to the detriment of the licensed auto assemblers.
Their operations are almost akin to the first phase of a licensed auto assembler. Under the Nigerian auto policy, a licensed auto assembler is expected to, in the first four years, make vehicles locally from SKD (Semi Knocked Down) parts, migrate to CKD (Completely Knocked Down (CKD) for another four years after which such operator is expected to, within another two years, go into full auto manufacturing, using reasonable percentage of local content.
But operators of the ghost auto industry do not have to follow the rules, since they are in the illegal business, set up to avoid paying appropriate import duties on used or brand new automobiles.
Modus Operandi in Ghost Auto Industry
Culprits travel abroad (or use foreign-based agents or accomplices), buy or pick for free used vehicles, accident or flood affected vehicles, which are transported to break yards and broken to parts.
Culprits even go as far as cutting vehicles’ body by half. They know that a container accommodates more units of dismantled vehicles than unbroken ones. After breaking, parts of each vehicle are marked with the same number or alphabet for easy selection and identification during assembling.
Afterwards, the parts are loaded into a container, shipped to Nigeria and cleared as container load of scraps, which attracts minimal clearing costs, compared to duties paid on used vehicles. After clearing, container is transported to a designated assembly workshop, few of which are located within Ladipo auto parts market in Lagos.
At the assembly site, on standby are welders/panel beaters, auto rewires and mechanics, each of who does his or her own bit in the process of knitting the cleared scrap into whole vehicles that would soon start plying Nigerian roads.
Recently, one Engineer Oluyemi, a resident of Ado-Ekiti, Ekiti State needed a mini bus for his ice cream factory. He travelled to Lagos, located where imported auto scraps are assembled within Ladipo used parts market; found specifically those specialising in assembly of mini buses. There he bought a Suzuki EVERY (a version of Suzuki Super CARRY made in Nigeria by an Ikeja-based Boulos Enterprises Limited.)
Both CARRY and EVERY are assembled and sold at Ladipo Ghost Assembly workshop. Oluyemi’s Suzuki EVERY was even assembled in his presence after which he paid N800,000, drove it to Ado Ekiti, arrange for its registration and, in less than two weeks, acquired genuine commercial vehicle number plates, third party vehicle insurance policy certificate, certificate of Roadworthiness and road tax. Though never sighted by any of the government agencies responsible for vehicle registration, the vehicle has since been on the road.
Aiders and Abetters of Ghost Auto Industry
Under normal circumstance, it should have been impossible to transport an unregistered vehicle, details of which are non-existent with any relevant government authority in Nigeria. Therefore, the question is: how would owners of such vehicles succeed in driving them inter-states without being nabbed by operatives of the Nigerian Custom Service (NCS), Nigerian Police Force (NPF) or even Federal Road Safety Corps (FRSC)?
Answer: Unfortunately, the same government agencies that are supposed to fight crime allegedly make it possible and so keep the nation’s ghost auto industry in business.
From the port to assembly workshop, through highways to the point of registration, law enforcement agents, including NCS, Police and FRSC are alleged to one way or the other assist the culprits to break the law with impunity.
According to Luqman Mamudu, former acting Director General of NADDC and President of Resident Automotive Components Dealers Association of Nigeria (RACDAN), in a recent interview with Nigeria Auto Journal, operatives of the Nigerian Custom Service (NCS) are to blame for the problem.
“In the first place,” he said, “the butchered used vehicles imported as scrap should not have been allowed into the country. For the custom cannot claim to be ignorant of what the business is all about.
“Custom officials are expected to check the containers, which they do. So why clear a container filled with vehicle parts, including car roof cut from its body, all numbered for identification? “
Luqman also blamed non-implementation of relevant policy meant to prevent such vehicles from being registered for use in Nigeria. .
While Mamudu was a director of Policy and Strategy in NADDC, the council initiated a vehicle information sharing platform, which would have enabled the Nigeria Ports Authority (NPA), NCS, NPF, FRSC, Insurance Industry and Vehicle Licensing authorities across the country to access and share information about every vehicle imported into or manufactured in Nigeria.
“Had it not been thrown away,” he lamented, “it would have been impossible to register in Nigeria vehicles smuggled, not properly cleared through the port or without proof of being made in Nigeria by a licensed auto assembler.”
Transportation Before Registration: To avoid being nabbed by law enforcement agents, a buyer of an unauthorised locally assembled vehicles would hire a police or a soldier, who is paid a sum ranging from N5000 to N20,000, depending on distance of travel. For instance, Mr. Oluyemi confessed to Auto Journal that, for a sum of N10,000, he hired a soldier who accompanied him, as he drove his Suzuki EVERY from Lagos all the way to Ado-Ekiti.
According to him, when stopped at Police, Custom or FRSC checkpoints, the soldier would salute: “Espirit de Corps” and was let off.
Registration: As revealed by Auto Journal’s investigation, registration of vehicles purchased from the Ghost Auto Industry is facilitated by certain staffs of the FRSC, who act as agents to do all necessary registration, including police report, Number Plates, Insurance and Road tax. With a sum of N50,000, such a vehicle would be fully registered.
How safe? Many of the said vehicle-built-from-scrap, are far from being safe, as they were originally destined for scrap yards/recycling, because they were remains from fatal accident or flood. As a result, their chassis are weakened and airbags defective.
Most of the time, fatal accident vehicles, especially those involved in head-on collision, end up with frame or structural problems. And once integrity of a car’s structure, including the chassis is compromised, restoration to a safe original form may be impossible. Danger is, in case of another accident, occupants of the vehicle could end up with fatal injuries or death.
Effects on Nigerian Auto Industry: Like smuggling and other ills militating against the Nigerian industrial sector, activities of the Ghost Automotive Industry have worsen the bad case of the nation’s licensed auto assembly plants. For instance, as at 2017, when Boulos Enterprises launched its made-in-Nigeria Suzuki CARRY, a unit was sold for about N5million. Today, a used CARRY assembled from Scrap at Ladipo sells for as low as N1.4 million. While another version known as Suzuki EVERY sells for as low as N800,000.
The vehicles are now quite popular with commercial transporters across the country. Same goes for saloon or hatchback of popular brands, like Toyota, Nissan, Mercedes-Benz, etc.
Gainers and Losers: As things are, operators of the Nigerian ghost automotive industry reap benefits and smile to the banks. Also law enforcement agents, who allegedly fit into the ghost auto industrial value chain, rip undeserved benefits.
While losers are the investors and stakeholders of the Nigerian auto industry, whose fortune are being undercut or eroded by smugglers, operators of the ghost auto industry as well as their aiders and abetters.
(First published in December 2019 edition of Nigeria Auto Journal, publication of Nigerian Auto Journalists Association)