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Nigeria Auto Industry and FOREX Drought


[dropcap]W[/dropcap]hen the National Automotive Design and Development Council (NADDC) came into being in 2014, the aim was to position Nigeria as one of the leading auto manufacturing nations. The council was mandated to create the enabling environment needed for local production of vehicles that can withstand global competition in terms of pricing, using local human and material resources, otherwise local content.

Although the policy is almost four years old, its implementation is still fraught with a lot of inconsistencies, coupled with the harsh situation posed by FOREX scarcity. In the light of these, stakeholders of the auto industry have incessantly called for its review, as they are without doubt that the right environment for its full implementation is still in the dreams.

The FOREX situation in the country, coupled with lack of patronage, makes it extremely difficult for many companies, which are licence to commence operation, because the CKD and SKD required for assembly are imported. And since hardly any of the auto manufacturers in the country can meet up now, because of the rising value of the dollar against Naira, they are taking measures to protect their companies from total collapse. Some suggestions had also been proffered for a staggered implementation of the policy at least for the time being.

Lead-Illustration-620x310The situation is so bad now that, while most auto companies have withdrawn the services of great numbers of their staff, over fifty firms have shut down operations completely, with many others, merely struggling to maintain existence.  Best to repeat it, that all manufacturing plants in the country have been completely idled by the harsh FOREX situation and what analysts have described as government’s slow poison approach to redeem them.

Suffice it to say that presently none of the 35 licenced auto manufacturing companies in Nigeria is not redounded by the misadventurous forex circumstances in the country, including Innoson Vehicle Manufacturing Co. Ltd., which seemed to be mustering some sort of lead before the killing foreign exchange hitch.

Innoson Vehicle manufacturing plant : Plant manager denied closure
Innoson Vehicle manufacturing plant : Plant manager denied closure

Motoring world International’s investigation stand to be corrected that none of the following auto manufacturing companies in the country are currently producing :ANAMCO in Enugu, Iron Products Industries Ltd, Leyland Busan Motors Ltd., National Trucks Manufacturers, PAN Nig. Ltd., Proforce Ltd., Scoa Nig. Ltd. Steyr Nig. Ltd., Stallion Nissan Motors Nig. Ltd., Stallion Motors Ltd., VON Automobile Nigeria Ltd., Dana Motors, Hyundai Motors Nig. Ltd., Nigeria-China Manufacturing Company Ltd., Honda Manufacturing Nig. Ltd., R.T. Briscoe Nigeria Ltd., Globe Motors, Toyota Nigeria Ltd., Coscharis Motors Ltd., CFAO Motors Nigeria Ltd and Kewalarams Chanrai Nig. Ltd, Leftbart Innovations and Consulting Ltd, Transit Support Services Ltd, Zahav Automotive Co.Nig Ltd, Nigeria Sino trucks Limited, Perfection Motors Co. Ltd, Richbon Nigeria Limited, General Appliances West Africa Ltd, Transguinea Ltd- Leventis Motors, Tilad Nigeria Ltd, Aston Motors, Bascon Nigeria, Lanre Shittu Motors and Koncept Autocentre Nigeria Ltd.

This information is further confirmed by the recent rating that Nigeria has the least auto manufacturing activities in the continent at present; and this is going by recent revelation that Morocco, with only two assembly plants, is producing 460,000 units and Egypt, which has 26 assembly plants currently boasts of 325, 000 production capacity, while Nigeria with an allegedly 36 assembly plants only has 15, 000 production capacity, an indication of an undue licencing of assembly plants that are not functioning.

If the Nigerian auto industry, after over three years of inaugurating the auto policy or the plan of it and 17 years after the moribund one of the 70s, is still playing last fiddle in the toying African manufacturing list, then one wonders what will become of the industry if nothing positive is done soon enough to rescue it from the prevailing comatose.

This past week, Innoson Vehicle Manufacturing Company Limited (IVM) was largely reported in the Media to have folded operations, following their laying off of some workers. The reason being that just as others, the eastern based auto manufacturers have been badly hit by the bad weather in the industry in recent time and were not noticed to be carrying out any meaningful operations in their manufacturing plant.

Though, according to Mr. Kingsley Kene Ojukwu, Innoson Industry’s plant manager, who spoke to Motoring World International on phone, no such thing has happened, one could notice that even there are no such plans by management of Innoson; no manufacturing activity seem to be going on in the company, no thanks to the ugly condition created by the Forex crisis.

This might have come on the heel of the chairman of the company; Chief Innocent Chukwuma’s belief that Innoson might not be able to cope with its larger workforce, if the federal government is not able to do anything to help out.

“I believe they (Federal Government) are doing something, but if they can’t do anything, we will lay off some workers,” Chief Chukwuma had said.

So it could be said that the laying off of some workers was not unusually strategic to keep the company running and still be able to pay salaries to those still retained.

However, as precarious as all these seem, there is still much hope that something can be done to salvage the situation.

All government needs do is reconsider its vision for the industry and act very promptly; show high level of seriousness for foreign investors to come and start from the beginning and improvise some kind of short term participation, inform of coordinating and monitoring the growth of the industry.

Perhaps, in the short time, the auto manufacturers can also strike short term partnership with one another, in twos or threes or even more. The effect may be to beat the FOREX bite, assume new efficiency and sustenance.

This FOREX challenge is one of those hard times which can be surmounted, but only by being more focused, objective and realistic.

And not by playing to the gallery just to be referred to as an auto manufacturer.

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