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Planned Tariff cut on Imported Vehicles: Auto Makers Caution Buhari

…Say Action will Set Nigeria’s Auto Industry Back by 10 Years

The Nigerian Automobile Manufacturers Association (NAMA) has warned that the planned tariff reduction on imported vehicles by the President Muhammadu Buhari-led government was not in the interest of private investors and the country at large.

Rather, NAMA challenged the government to revive the National Automotive Industry Development Plan (NAIDP) 2013 for the growth of the automobile industry in Nigeria, stressing that policy inconsistency was the bane of growth of the country.

Speaking at the Capacity Training organized by Nigeria Automobile Journalists Association (NAJA), Mr. Remi Olaofe, the Executive Director, NAMA, wondered why the Federal Government would reverse itself on a policy that was meant to reduce foreign exchange, create more jobs for qualified personnel and make the country less dependent on importation.

The Federal Government had recently at the Federal Executive Council (FEC) announced the plan to reduce the import duties and levies on buses, tractors and other motor vehicles as contained in the recent 2020 Finance Bill.

The government had said it would reduce tariff on tractors from its present 35 per cent to 10 per cent; reduction of duties on motor vehicles for the transportation of goods from 35 per cent to 10 per cent; reduction of levy on motor vehicles for the transportation of persons from 35 per cent to 5 per cent.

Olaofe lamented that while Nigeria was still dilly-dallying on the implementation of NAIDP, the neighboring West African country, Ghana, which he said “borrowed Nigeria’s automotive bill,” had turned its own into a law with automobile companies jostling to establish plants in that country.

He emphasized that the implementation of the African Continental Free Trade Area (AfCFTA) in 2021 would further weaken the Nigerian economy as goods and products from Africa could come in without restrictions, lamenting that the country’s border was already porous.

He said: “It can’t be in the interest of this country to say to ourselves that the NAIDB bill 2013 is about to collapse. There is no single part of vehicles that is manufactured in this country. We used to produce tyres, they are no more here. We produced batteries in this country before, it has become a history. In Kaduna, we had a company assembling Peugeot vehicles, it is no more there. The assembling plants are not doing anything again.

“There is no economy in the world where you see vehicles manufacturing that you go from zero to a Complete Knock Down (CKD), there is a process. It is a driven process.  Money is involved. Automotive policy is the best we have, but we want to destroy it.

“This is very scary. By next year, we are starting with the AfCFTA . What is going to be the hope of this country? Ghana borrowed the auto policy of Nigeria, Ghana has commenced implementation. I was in Rwanda last year to see its assembly plant, it is still this Semi Knock Down (SKD). The issue is that you cannot have an auto assembly without the market. We have got the market here.”

Also, Chief Innocent Chukwuma, Chairman, Innoson Vehicle Manufacturing Company Limited (IVM) in a recent interview with journalists had said that the reduction of the tariff would be a disincentive to investments, in addition to setting Nigeria’s automotive industry back by at least 10 years.

Chukwuma described the government’s plan as a “shocking decision,” stressing that it would lead to the forced closure of many auto plants in the country.

Chukwuma had argued that a reduction in duties on imported vehicles would lead to massive importation of fully built-up vehicles, resulting in unfavourable competition that was likely to run the Nigerian auto makers out of business.

He described the duty review as an embarrassing policy summersault, considering that the present charges on imported vehicles were prescribed by the Automotive Policy to discourage the influx of fully built up products, while helping to boost production by the domestic auto plants.

He warned that the Federal Government’s plan would result in serious unemployment crisis as the local auto plants and related companies that would be adversely affected by the continents of the proposed bill would be compelled to lay off workers in order to survive.

He disclosed that his plant had just designed and produced two new affordable vehicle models  –  IVM Connect with a price tag of N4.5 million and seven-seater IVM mini bus going for N5 million, stressing that the company invested heavily in the project with hundreds of units ready for delivery.

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