For about two decades after Nigeria’s independence (1970s and 1980s), the auto industry maintained a significant growth. The steady motion was disabled from late 80s to early 90s, no thanks to federal government’s policy somersault. From 1993, past administrations, including that of the former President Goodluck Ebele Jonathan, made efforts to revive the sector. But, 27 years after, President Muhammadu Buhari’s regime, which took over from 2015, has failed to rally enough political will to get the industry back on its feet.
Luqman Mamudu, MD/CEO of Transtech Industrial Consulting Limited, a pioneer Consulting Firm operating across industrial sectors with particular focus in the automobile industry and ancillary industries, has been actively involved in the auto industry revival efforts.
He was the Director of Policy and Strategy, National Automotive Design and Development Council (NADDC), the government body that midwife the revival move. Briefly, Mamudu was a Director General of the Council in an acting capacity.
After Nigeria’s 60th independence anniversary celebration, Mamudu, in an exclusive chat with Motoring World Nigeria, recalled the golden years of the nation’s auto industry and how things went off beam.
Asked to advise President Buhari on how to incorporate the auto industry into the government’s economic diversification programme, he replied: “The automotive program remains an excellent plan. But its implementation has been abandoned. Apart from passing the NAIDP Bill into Law, I will advise that the critical programs of the plan be quickly realized. Once these programs are implemented, all Nigerians will remain grateful forever, because the automotive industry has a proven track record for its multiplier impact on an economy…”
Enjoy the chat in full…
Motoring World: Nigeria has just celebrated 60th independence anniversary. How would you access the nation’s journey towards auto industry development? What did the nation get right? What did the country get wrong? And what is the best way forward?
Mamudu: The nation actually achieved a robust automotive industry with the establishment of six world class automotive assembly plants in the 70s and 80s. The country even went beyond assembling at SKD(Semi Knocked Down) level. Nigeria was at some point, consolidating on CKD (Completely Knocked Down) and aggressive local content development.
Peugeot automobile plant in Kaduna for instance, had over 84 local components suppliers. These items included tires and batteries for which Nigeria was self-sufficient. Other remarkable products made fully in Nigeria were automotive Glass, Wire harnesses, Radiators, seats, seat belts, lots of plastic parts etc.
Unfortunately, the government’s policy summersault practically ruined all the efforts.
We got things wrong, when we implemented the structural adjustment program (SAP) without caution and disregard for critical sectors. Other Countries including Brazil that is today a leading force in automotive manufacturing were forced to take the SAP pill. But they had sectors they refused to liberalize.
We also got it wrong with the slow pace of local content pursuit in a holistic manner such that by the time the Naira was devalued prices of imported input became prohibitive. So everybody chose to import second hand cars and spare parts.
This is seriously undermining the economy even as we speak. However, the launch of the automotive policy in 1993 and the establishment of an Institutional framework; National Automotive Council (NAC), now NADDC, remain the best move to resuscitate the industry for national development.
Motoring World: More than ever before, the Nigerian auto industry has witnessed very low level of activities especially in the past one year, even before COVID-19 struck. As a stakeholder and industry expert, how worried are you?
Mamudu: I am quite worried because the objective for launching the industry is far from being realized, even though I believe we are on course. Factors like forex scarcity before Covid19 and even now continue to limit investment alongside reckless bureaucracy by all agencies and government department charged with promoting the sector.
This bureaucracy is particularly worrying, because it has considerably reduced and stunted capacity utilization. I have said it severally that to renew a license that is valid for only one year in 5 months on the average is economic sabotage. Logistic challenges don’t help matters either.
Motoring World: As a former Director of strategy and indeed Acting DG of NADDC, it seems, since you left, nothing has been built on the foundation laid down by your management team. The NAIDP you put together has failed to get a legal backing, hasn’t it? And are there ways you believe these have affected the present state of the auto industry?
Mamudu: Not signing the Bill has definitely affected the industry with consequences. All the OEMs, that had earlier lined up waiting to invest in Nigeria, are now taking their investments elsewhere in Africa; some in our neighboring countries. You can ask the Association of Africa Automotive Assemblers (AAAM), who led several delegations to Nigeria leadership for support. Nigeria remains the biggest market; so hope is not lost to bring them back. And this can be done quickly.
The Bill was rejected for the simple reason that, at the time, it successfully went through all the processes in the national assembly. It came out largely different from its original form. It came out as replicating the Pioneer status act. I believe the Nigeria Investment promotion Commission (NIPC) raised an objection to the Presidency. I’ve heard of several attempts to review and resubmit it as an executive bill. This is taking forever. The pioneer clauses should be expunged and resubmitted as an Investment Confidence bill, which is what it was in its original form.
Motoring World: Last year April, Senator Ben Bruce presented a bill to the Senate, asking for migration to compulsory use of Electric cars in the country by the year 2035, but the bill was thrown out, because some senators believed it would affect the nation’s oil-dependent economy. What is your reaction to that?
Mamudu: I don’t know much about it. But from the reasons you highlighted, the Bill was thrown out of ignorance and petty patriotism. The global automotive industry is adopting alternative energy. And I don’t see any reason why we shouldn’t be part of it. In fact, we have no choice. Very soon, Tokunbo electric cars will start flooding the country. So would new ones, as they get cheaper with super batteries and Cells. Shouldn’t we be ready with the right policy environment? Global demand for fossil fuel is declining rapidly. It wouldn’t matter if Nigeria is producing or not.
Motoring World: If you were in a position to advise President Muhammadu Buhari regarding how to incorporate the auto industry into the government’s economic diversification programme, what will you tell him?
Mamudu: The Nigeria Automotive Industry Development Plan (NAIDP), which has translated into ongoing action, was designed by Stakeholders, including the Nigeria Society of Engineers (NSE), Nigeria Automotive manufacturers Association(NAMA), Standards Organization of Nigeria(SON), Federal ministry of Industry Trade and investment (FMITI), Raw material Research and Development council (RMRDC), Manufacturers Association of Nigeria (MAN), Automobile Local Content Manufacturers of Nigeria (ALCMAN), the representatives of Federal ministry of Finance (FMF)/Nigeria Customs Service (NCS). All with the Presidency prepared this plan under the direction of global experts.
The NAIDP was designed as a strategic plan to diversify the economy in the face of a growing threat to the Nigeria balance sheet with massive imports reaching nearly $8b by 2013 at the time of launch. This was seen as capable of undermining the economy. And it probably still will if not already with over half a million USD vehicle imports annually from scrap yards of Europe and Americas.
The automotive program remains an excellent plan. But its implementation has been abandoned. Apart from passing the Bill into Law, I will advise that the critical programs of the plan viz; Automotive test center for which over 3 billion naira has already been committed, the Automotive supplier Parks for which about 800 hectares of land already acquired nationwide, and a Credit purchase scheme, should be quickly realized.
Once these programs are implemented, Nigerians will remain grateful forever, because the automotive industry has a proven track record for its multiplier impact on an economy- all sectors; name it. All these calls for NAIDP review is premature. You can only undertake a meaningful review of what you have implemented.
There is already installed capacity to assemble over 600,000 units of automobiles in Nigeria. But less than 3%of this is utilized. We need to quickly create a cheap source of funding to grow demand; especially for Commercial vehicles including buses and trucks to start with.
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