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Home Opinion Kick Starter with Femi Owoeye Nigeria’s Auto Industry in Catch-22: Open Letter to President Buhari

Nigeria’s Auto Industry in Catch-22: Open Letter to President Buhari

Your Excellency,

unfortunately, you are not being rightly informed about certain contentious issues affecting the nation’s automobile industry.

There is no doubt about this because your administration believes in continuity of governance. A number of important infrastructural projects started by your predecessor have either been completed or are at the point of completion, including rail projects and Roads.

When you assumed office in 2015, you promised, through your then Minister of Industries, Okechukwu Enalema, that you would continue the auto industry revival programme started by your predecessor. You did so up to a point. As far back as November 2017, the National Assembly passed the Nigeria auto industry Development Plan bill (NAIDP) into law. Your decision not to sign the bill was not made known until after the 2019 General election.

Following the appointment of Otunba Niyi Adebayo as the Minister of Industries, the auto industry development bill was suspended for review. Stakeholders, including the executive members of the Nigeria Automobile Manufacturers Association (NAMA) were consulted for imputes. I gathered that the document was made ready for resubmission to the National assembly. That never happened. So the plan cannot be fully implemented.

During the 2021 Annual Training Workshop for the Nigerian Auto Journalists, the Director-General of the National Automotive Design and Development Council (NADDC), Jelani Aliyu, who joined the event via zoom, gave an assurance that you would sign the bill into law before the end of the year. I asked him the question. I did not believe his answer. And I’ve been proved right.

I know the common argument is that most parts of the auto industry development plan have already been implemented. That’s right. But what you are probably not been told, your Excellency, is the implication of not passing the NAIDP into law. Even if you implement all the provisions of the bill, which is impossible with the 2020 Finance act, you would still not attract investment from the Original Equipment Manufacturers (OEMs). They would not invest in Nigeria for fear of policy somersault. Without passing the NAIDP into law, another administration might assume office and simply jettison it.

Nigeria is a very important and attractive market to investors globally. If we have all physical and legal enabling environments in place, most automakers in the world would be jostling to establish in Nigeria. Look at it this way. Since the revival of the policy in 2013, how many OEMs have been established in the country? None.

Whereas, the Ghanaian government was said to have picked a copy of Nigeria’s auto policy and NAIDP, re-framed it for Ghana and expressly passed it into law. What followed? OEMs like Toyota Motor Corporations and Volkswagen have established in Ghana.

But for failing to write NAIDP in our statutes book, all we have had are indigenous franchisees, many of which are automobile dealers, who set up assembly plants just to enjoy the Federal government incentives.

That is why, even with the 2020 Finance Act, which lowered the import duties of fully built-up imported vehicles, most Nigerian auto assemblers are not complaining. The act is a great incentive to importers. So the local assemblers have little to lose. The ultimate loser is the country, as we will be losing more FOREX to importation.

What the promoters of the 2020 Finance Act sold to your administration was that it would cushion the economic effect of the COVID-19 pandemic on Nigerians. They argued that slicing the duties of used and new vehicles from over 70% down to10% respectively would reduce the cost of import on vehicles, encourage the importation of vehicles through Nigerian ports, reduce imports through foreign borders and ultimately translate to a reduction in the cost of transportation for Nigerian businesses and average Nigerians.

The promoters know that this move would affect the nation’s auto industry. They know they cannot easily convince you to jettison the NAIDP, as you have received a stronger argument for the document.

With due respect, your Excellency, the questions remain: Has the reduction of duty on vehicle importation lowered the cost of transportation in Nigeria? The answer is NO. Has vehicle smuggling and importation via Benin Republic stopped? No.

To what extent has the local auto assemblers suffered from the reduction of vehicle import duties? They should have staged a protest by now. But they do not have to, because whichever way you look at it, many of the local assemblers are vehicle importers and dealers. On the contrary, their businesses boomed better in 2021. An assembler can now legitimately import as many FBU vehicles as possible without restriction. Before they could only import a percentage of their SKD as FBU and enjoy the special incentives for local assemblers.

Nigerian Custom service might flaunt boomed revenue. But, the truth is:  the ultimate losers are Nigerians. Jobs have been lost at assembly plants. OEMs that had seen Nigeria as a potential manufacturing hub for Africa have started establishing in Ghana.

Worst, Nigeria is already a signatory to the African Continental Free Trade Agreement (ACFTA). We have the biggest market and economy in Africa. Nigeria’s auto industry has so much potential to slice for the country a large chunk of ACFTA dividends. OEMs, including Daimler, Toyota, Nissan, Volkswagen, Peugeot, Ford, BMW, Geely, Jaguar LandRover among others are waiting on the mark to establish in Nigeria. All they are waiting for is a legal assurance that their investment would not suffer policy somersault.

Your Excellency, in addition to the infrastructural revolution and security your administration is tackling from all ends, the only addition the OEMs are waiting for is appending your signature on the nation’s auto industry development plan bill.

FEMI OWOEYE, Editor, Motoring World International

Otherwise, Nigeria would become a dumping ground for made-in-Ghana vehicles. And operators of our auto assembly plants would simply become full-time auto dealers.

In the meantime, the real stakeholders of the nation’s Auto industry remain in Cash-22.

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