FEMI OWOEYE
President Bola Ahmed Tinubu’s attempt to in 2024, zing the Renewed Hope Agenda with a leaf of the auto industry development is capable of producing an acceptable aroma of hope for the citizens, especially if prepared with an ample measure.
One of the his administration’s laudable policy revs of the year was the launch of what was tagged: “Renewed Hope Automobiles Credit Fund”.
Akin to the Auto Finance scheme, a key content of the yet-to-be-legalized National Auto Industry Development Plan (NAIDP), the programme is aimed at assisting Nigerians to, from January 2025; acquire locally assembled/manufactured vehicles via loans accessible at single digit interest.
However, as impressive as it sounds, implementing the credit scheme without other provisions of NAIDP is like producing a car without wheels and other components that make it roadworthy.
For instance, what the nation’s Petroleum Industry Act (PIA) has achieved for the country today would have been impossible were it not passed into law in 2021.
Like the PIA, NAIDP is another unused key for unlocking the nation’s economic growth via the auto industry. It is, therefore, vital for President Tinubu to carve the policy on the nation’s legal stone before this year runs out.
Likewise, launching the Auto credit Fund with a paltry sum of N20 billion is no different from powering a 50 Ton off-Road 8X4 Heavy Duty Tipper with an ordinary V4 engine, instead of V12. It would start, rev, move the truck forward a bit and break down shortly.
As agreed by the industry stakeholders, the starting fund of N20 billion is a far cry from what is needed. To honestly activate the programme, the Federal Government, through the NADDC, has got to unleash what used to be known as the NAC Fund levied on auto importers over the years. There is a need to probe into how much of the levy was collected over the years, how much has been spent on helping the assembly plants and what is left, which can’t be N20 billion.
There is no gainsaying the fact that, within the last 18 months, the auto industry benefited tremendously from government attention, thanks to the present Director General of the National Automotive Design and Development Council (NADDC), Mr. Joseph Osanipin. Such attention came with part implementation of the NAIDP. The truth, however, is that, even if the NAIDP is implemented in its entirety, the industry shall remain susceptible to policy Somersault, so long as the developmental ingredients(NAIDP) are not preserved by the act of parliament.
It needs to be sent back to the national Assembly, passed, transmitted to the President for an immediate signing into law.
Promoting the CNG conversion: As a cheaper alternative to fossil fuel, price of which hit the roof on the heel of fuel subsidy removal, year 2024 witnessed a nationwide launch of accredited centres for CNG conversion. Of course, following a couple of explosions reported, no thanks to corner cutters, the programme suffered misinformation via the social and indeed the mainstream media.
The social media was deluged with unscientifically proven negative claims about CNG. But along the line, the voice of truth extinguished the fire of lies.
One of the ‘cherries-on-the-cake’ has been the introduction of free CNG conversion for commercial vehicles and tricycles across the country.
However, while lots of commercial vehicle and tricycle operators are already smiling to the bank, having converted to CNG, the policy is yet to impact positively on Nigerians, as beneficiaries still charge passengers the same fare as those running on far more expensive fossil fuel. And that is unlikely to change until the free CNG conversion becomes widened to most commercial transporters, which should be followed by a statute mandating a slash of public transport fares by at least two-third. This should be included in the prime list of President Tinubu’s tasks for 2025.
Another similar downside has been the high CNG conversion cost for private vehicle owners. As at January 2025, cost of converting a vehicle to CNG ranges from about N1.2million to about N1.8 million, depending on engine capacity and location.
However, to assist disadvantaged vehicle owners, the Presidential Initiative on Compressed Natural Gas (Pi-CNG), in collaboration Ministry of Finance Incorporated (MOFI) and the Nigerian Consumer Credit Corporation (CREDICORP), launched what is known as Credit Access for Light and Mobility (CALM) Fund, a scheme that helps Nigerians convert their vehicles to CNG on credit.
Unfortunately, without the passage of the NAIDP, this policy will hugely benefit importers and users of imported used vehicles, popularly known as ‘tokunboh’, which forms over 80% of the vehicles plying the nation’s roads. Aside the need to give extra incentives to the vehicle assemblers /manufacturers of factory fitted CNG vehicles, legalizing the NAIDP will totally reverse the trend.
Local manufacturing of CNG Conversion Kits: The federal government agency, NADDC, towards the end of 2024, started engaging the Original Equipment Manufacturers (OEM) to train local manpower and manufacturers of conversion kits for best CNG conversion solutions. This is one programme that needs a deliberate follow-up. For making CNG kits in Nigeria will go a long way at bringing down the cost of conversion, a development that would enable a sizable Nigerian motorists to run their vehicles on CNG. As a result, the nation’s balance of trade will soar further. Oil refineries would have to export most of their finished products, generating more FOREX for the country, boosting the value of Naira and ultimately flattening the inflation.
Automotive Local Content manufacturing: During the year under review, NADDC announced putting in place necessary structures and frameworks to begin automobile spare parts manufacturing in the Nigeria, a move, the council’s boss, Osanipin, claimed would reduce the country’s dependence on spare parts imports, which currently gulps $1bn annually. Unfortunately, though quite commendable, the move would only achieve its purpose if the locally assembled/manufacturers succeed in increasing capacity utilization as well as sales volumes.
Like the proverbial killing of many birds with a single stone, one major objective of the NAIDP is to increase volumes to a point at which local content/auto parts manufacturing would become viable for the OEMs and existing Nigerian makers of auto parts.
Therefore, the call for the passage of the NAIDP has reached an embarrassing crescendo. Within the last eight years, African Association of Automotive Manufacturers (AAAM) severally called for it.
The same goes for the Nigeria Automobile Manufacturers Association (NAMA), which reiterated its appeals at the Nigeria Auto Industry Summit (NAISU) held in June 2024 and, through its Chairman, Mr Bawo Omagbitse, at the Automotive Industry Stakeholders Conference held in the last quarter of the year.
Rather than gallivanting across auto assembly plants in the name of canvassing for Plans to Boost Automobile Production Volumes, the National Assembly’s Committees on Trade and Industry should concentrate on reminding President Tinubu of the urgent need to forward to them the modified NAIDP bill for speedy passage and prompt Presidential assent.
It is important to note that, despite being placed on the nation’s policy front burner of 2024, the nation’s auto industry is nowhere near Uhuru and will never truly be until the NAIDP is signed into law, a move that would put the nation’s auto industry on the DRIVE MODE for stroke towards the desired destination.
Time is running out. From 2026, attention would be on General Election. This is, therefore, the year to safe the nation’s auto industry. For President Tinubu, this is a tax that must be done.
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