Implementation of program pillars slows capacity utilisation in auto industry – Mamudu

Luqman Mamudu, a Nigerian automotive development expert and Former Director of policy and planning at the statutory government agency, the National Automotive Design and Development Council (NADDC) has said that capacity utilisation in the auto industry never deepened beyond five percent due to challenges with the implementation of program pillars.

According to Mamudu, the fiscal policy incentives were practically removed by 2019 and the public therefore mobilised against it, as two of Nigeria Automotive development key game-changing programs were abandoned.

“They are the investor confidence bill or NAIDP bill about which you asked and the automotive consumer credit fund already under consideration by CBN,” he added.

Speaking on achievement in the Nigerian automotive industry this past 10 years, Mamudu admitted that there has been considerable progress in the industry as 90 percent of the manufacturing and assembly companies established in Nigeria’s first automotive program were revived but not revitalised because they still have not reached their full potential in capacity utilisation.

“Established between the 70s and early 80s, their combined capacities met 70 percent of Nigeria automotive needs. Secondly, the NAIDP through its robust fiscal provisions resulted in an investment pipeline through technical partnership and their Nigerian brand distributors, Dealers and just Entrepreneurs.

“The result was an upsurge in installed capacity from a mere 5000 units to about 450,000 units per annum. The plants include Peugeot Automobile of Nigeria (now PAN NIGERIA), VWON NIGERIA (now Stallion) FIAT NTM (Now NTM), ANAMMCO, and Steyre. Nissan, Yutong buses, Ford, Kia, MAN Trucks, Hyudai, Sinotruck, and more.

“In fact, some OEMs (Original Equipment Manufacturers) like HONDA, have set up assembly operations directly. Many local Entrepreneurs led by Innoson Motors Manufacturing (IVM) also set up robust manufacturing and assembly operations. Others within this space include OMAA, Jetvan Automobile Motors. These all happened within 4 years of NAIDP tenure in 2017,” he explained.

Speaking on the N20 billion auto finance scheme through the CreditCorp being launched by the Federal Government, he said it is a very welcome development as it revisits one of the key pillars of NAIDP.

“The establishment and appointment of board of consumer credit corporation (CREDITCORP) as a credit access to all Nigeria consumers is a welcome development. Generally, such an institution is key as an inclusiveness policy and will benefit everyone including the Nigeria Automotive assemblers especially if it leads to increased demand for their products.

“I note that the NADDC may have leveraged its platform to launch a targeted N20b funds for local automotive manufacturing companies only. I believe it is an attempt to resuscitate one of the game changing inbuilt program of NAIDP long abandoned.

“If well funded and implemented, the Nigeria Automotive industry is in good times. Let me mention here that one of the key achievements of NAIDP was the collaboration of NADDC and Equipment Leasing Company of Nigeria (ELAN) to push for the total reform of leasing law in Nigeria. This will impact the access of CREDITCORP resources positively,” he explained.

He suggested that it is best to encourage existing and prospective automotive assembly plants to install lines to build new CNG propelled new automobiles rather than rekitting.

Such vehicles, Mamudu said will have more engineering integrity than rekitted ones, adding that rekitting should be limited to short term measures for used vehicles only.

According to him, on the other hand, the electric vehicles technology agenda can be pursued alongside global adoption pushed by technology and government policies/ regulations.

He said Nigeria can meet its overall emission reduction targets faster with added gains from ongoing CNG programs, adding that Nigeria should launch a policy framework for automotive vehicle electrification in the NAIDP 2 which I learnt is being processed by NADDC.

“Above all, What is important is for Nigeria to open a mobility space for goods and services to flow freely. Automobiles/roads play a key role alongside air, rail, waterways, and broadband mobility.”