On October 3, 2013 Nigeria announced the introduction of a new automotive policy aimed at discouraging the importation of wholly assembled automobiles and encourage local manufacturing.
The announcement was greeted with doubts as the policy was reminiscent of a similar one in the 70’s. The previous made a promising start, with the spring up of assembly plants in across the country. Brands like Peugeot, Volkswagen and LeyLand rolled out locally assembled vehicles, creating thousands of jobs and boosting economic growth.
Years later, it seems we are back to the same starting point. The government is seeking to resurrect an ailing industry. Asides a few indigenous producers such as Innoson, the industry is void of primary manufacturers with importation the only sustaining means.
Having recognized the importance and basic role of the automotive industry in the industrial development of the country, the government of Nigeria devised a new automotive development plan, which included a new tariff of 70 percent duty on imported used cars (popularly known in the country as Tokunbo).
While car dealers welcomed the policy, the country’s middle class – most of who cannot afford new cars and have relied on Tokubo vehicles – have been unsettled about the policy.
The government, while dousing the doubts of Nigerians unsure about the policy’s positive returns, said increase in tariff will reduce the huge amount being spent annually on importation of cars, citing a report that said Nigeria spent an estimated N550billion ($3.3 billion) on importation of cars in 2010 economic year and about $3.4billion in 2012.
Nigeria’s Minister of Industry, Trade and Investment, Olusegun Aganga, had said after the announcement of the new plan that “The policy will not result in banning of the importation of vehicles in Nigeria but to focus on promoting investments in affordable made-in-Nigeria vehicles”.
Following the announcement, the policy is already showing some positives results as leading car makers have started declaring interests in local manufacturing.
In January, Indian automobile manufacturers, TATA Motors and TVS Motor concluded plans to establish automotive plants in Nigeria, following separate meetings with the country’s National Automotive Council (NAC). Nissan will unveil a new line of locally manufactured cars at an old Lagos Volkswagen Assembly plant by April, quoting Renault-Nissan CEO, Carlos Ghosn.
South Korean auto-giant, Kia Motors recently signed an agreement with Dana Motors Limited to set up a vehicle assembly plant in Nigeria within the next 2 years. A deal may also be in the pipeline between Japanese car giants Toyota and its Nigerian representative, Elizade Motors. The deals already signed and the ones that may follow may be a sign of good things to come.
“In many countries around the world, automotive industry plays both strategic and catalytic roles in economic development, particularly in employment creation and wealth generation,” Aganga had said.
It is hoped that Nigeria’s current population and economy makes the country’s potential vehicle market an attractive one for international manufacturers. “This is more than sufficient to support an automotive industry,” Aganga added.
