Nigerians to get cheap money to buy cars

Nigeria’s auto purchase scheme, thought out to help create cheaper and easier access to vehicle ownership in the country, is now awaiting the Central Bank of Nigeria’s (CBN) approval, authorities working on the project have told BusinessDay.

The National Automotive Design and Development Council (NADDC) and Wesbank, the technical partner on the project, are said to still be very much committed to the project and are now in talks with the Central Bank of Nigeria (CBN) for the approval which ought to kick-start the entire process.

The NADDC, previously known as the National Automotive Council (NAC) had announced plans earlier in the year to establish a finance company which will take-off with about N20 billion capital to finance vehicle purchase by Nigerians, as the full implementation of the National Automotive Policy takes course.

The policy is proposed to place import restriction on new and fairly used vehicles by raising duties on them to 70 per cent, from 35 per cent.

But it is hoped that it will cut down the going pressure on the overall cost of vehicle financing in the country.

Although the scheme is still being fine-tuned by NADDC, the company is to be managed by Wesbank, a South African Bank which partners with various motor industry stakeholders to deliver its major product, which is vehicle finance.

With a subsidiary in Nigeria, Wesbank is one of the largest credit installment institutions in South Africa and is that country’s largest provider of loans for cars.

Luqman Mamudu, director Policy, Planning, NADDC told BusinessDay that the positive response already received from the CBN in working out modalities of the scheme has put paid to uncertainties surrounding the project which was announced in March.

Mamudu explained that   the proposed automotive vehicle finance scheme, though  delayed, is  on course, as Wesbank and the  NADDC are still very committed to th project.

His said, “Together, we have made presentations to the CBN after an initial meeting between the Director-General and the CBN Governor. A final submission was made to CBN on the 21st of July 2015.

“We are waiting for the outcome but we have been assured of a favourable response. Once we get the go-ahead from CBN, the scheme will be launched with the minimal funds at our disposal.

“We hope to fund the scheme properly from the levies placed on imported fully built vehicles. This levy is paid by importers to the Nigeria Customs Service (NCS) account in commercial banks,” he noted, speaking further on the funding of the scheme.

He affirmed that NCS remits those payments into the NAC levy account with the CBN and that the NADDC has applied for the application of the fund as approved.

He added,”The whole idea is for Nigerians to be able to go to a dealer of any Nigerian Assembled vehicle, and access this fund at minimal interest rate. One cannot say the exact interest rate for now but be assured that it will be far below the commercial interest rate regime of commercial banks.

“If we get more funds from levies, we are likely to get a single digit interest rate but if we have to rely more on a mix of our money, mezzanine, and senior debt, then it will be near 13-14 %.”

He said all these will be worked out in the course of time because  the fund is aimed to raise Nigerians  living standards, and  that there are expectations of an injection of some intervention funds along the line, until the authorities are able to levy second hand vehicle imports which threaten to undermine automotive  assembling effort.

Harrison Edeh