Barely a year into its commencement, Nigeria’s Automotive Policy has attracted investments worth up to N25.5 billion ( $128 million) and significantly dropped dumping of vehicles into the country, authorities say, signaling huge potential in a long abandoned sector in terms of driving the much touted economic diversification.
Total investment as at date in equipment alone is recorded at $78million while over $50 million has been committed to a combination of land purchase and long lease. Lease for assembly space average $250,000 per anum or N50 Million.
“Based on these findings we estimate that $50million may have been committed on land space and infrastructure in new investment between 2013 to date,” Luqman Mamudu, Director, Policy and Planning at the National Automotive Development and Design Council,(NADDC) told BusinessDay.
According to Mamudu, over 80% of the assemblers are equipped to put together commercial vehicles. Some are assembling under contract with existing assembly plants with idle capacity because they lack the funds to fully utilise capacity. The National Automotive Industrial Development Plan, (NAIDP) allows this until they are able to build their own plants.
Thirty-seven companies have been granted licences to assemble vehicles in Nigeria while three are being processed. Of these, 20 have committed funds to assemble mostly at semi- knocked-down (SKD) level, he explained.
A further breakdown shows that apart from the existing assembly plants which may have invested slightly to rejig, but based on the cost submitted by assemblers, average cost of equipment to undertake SKD assembly for cars is $5million while for SKD to assemble commercial vehicles is $3 million.”
This brings total investment to $128million or or N25.6 billion. Total installed capacity to assemble vehicles in Nigeria by the combination of existing plants and new entrants is about 300,000 units of automobiles per anum.
On made in Nigeria cars and promoting local content, Mamudu said:”The concept of made in Nigeria cars has to be redefined. We cannot re-invent the wheel. The ECOWAS rule of origin considers a car assembled in any member country in which local content can be determined to be above 30% as made in that country.”
In the past, Nigeria had attained over 40% in the Peugeot Series when we had over 70 components manufacturers that made items including wire harnesses, automotive glass, batteries, radiators, seats, exhaust pipes, many rubber parts, some pressed parts, cast parts , shock absorbers, clutch-plates,”he explained.
Mamudu however observed that the auto-policy programme has not been able to attract anticipated investment in assembly operation, as a percussor of components and parts development has been slow because of avoidable bureaucracy, noting that some critical implementing ministries and agencies, like the customs have not been co-operative enough.
Prior to the commencement of the auto-policy in 2013,a total of about 400,000 vehicles(100,000 new and 300,000 used) valued at over N550 billion($3.451 billion) were imported. Currently, over 30 Original Equipment Manufacturers (OEMs) had hit the ground running, with some of them already establishing assembly plants.
At full capacity,the Nigerian automotive industry has the potential to create 70,000 skilled and semi-skilled jobs along with 210,000 indirect jobs in the SMEs that will supply the assembly plants.
On the progress in job creation,he explained:”Once a critical volume of assembly ,say for instance 500,000 is attained, component parts manufacturers are waiting to come and locate operations here.
“This is when the real jobs will happen. At the moment, we are struggling with less than 20,000 jobs, but committed investment can quickly ramp up to 300,000 within a year, if bureaucracy is reduced,s many investors are waiting”
Those already assembling are facing tough times clearing goods due to misplaced multiple inspection by agencies which have no technical competence to asses an assembly plant but who all the same insists on doing so without regard to NADDC position. It is like another agency other than NAFDAC exclusively certifying pharmaceutical firms.”
Harrison Edeh
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