• Wednesday, July 24, 2024
businessday logo


Analysts condemn FG limited support for indigenous car makers


Analysts have bemoaned the lack of support from the Federal government to indigenous car makers.

According to the analysts, the federal government has demonstrated a lack of foresight amid economic crunch by allocating about N5 billion for BMW cars in the 2016 budget. It showcases government’s distorted voice for the support of local manufacturing companies, notable among which is the automobile industry.

Nigeria’s automobile sector is projected to contribute at least 4.5 percent of 2016 global automotive sales with the rise in investors and auto financing, coupled with favourable government policies.

Against a similar backdrop, experts have advocated for import substitution and export promotion to cushion the adverse effects of the volatile oil price on the economy. They unanimously tipped the manufacturing sector to contribute a substantial quota to the country’s revenue, as her biggest foreign exchange earner-oil-is threatened.

Biodun Adedipe, chief consultant, Adedipe Associates Limited, expressed huge dissatisfaction in government’s failure to support the automobile sector arguing that our automobile sector must be stimulated to a point where forex is made from exporting made in Nigeria cars.

He fingered Innoson Vehicle Manufacturing as an optimal performer in the sector that deserves some credit for taking the initiative to manufacture made in Nigeria vehicles as well as for creating job opportunities for so many Nigerians.

Adedipe revealed that patronage of the likes of Innoson could trigger an expansion of their plants, increase their staff strength as well as enable them become internationally competitive. He asserted that he had no doubts whatsoever that they were credible and could match the demand of the government with their production capacity on a steady rise.

The market for cars-new and used in Africa’s most populous country is estimated to be worth more than $6 billion according to available statistics.

Henrieta Onwuegbuzie, academic director, Lagos Business School (LBS), “emphasis should be on what we can export rather than the naira devaluation,” said while speaking at the Central Securities Clearing System (CSCS) annual economic outlook held in Lagos recently.

Onwuegbuzie noted that the declining oil price is favourable. She stated that low oil price has call for the diversification of the economy and which will prompt Nigerians to be export oriented. “If the country focuses more on foreign exchange earnings in the short term and long term, the devaluation of naira may play second fiddle to exportation of our commodities.”

The potentials of the automobile industry have made many expect it to suffice as a buffer for the economy.

Adedipe made references to countries like India and the United States who employed austere measures in ensuring their automobile industries had gilt-edge performance locally and internationally. The industry today plays strategic roles in economic development particularly in employment creation and wealth generation. The government of these countries have dictated the tone of patronizing locally made cars by restricting officials from driving imported cars which has gone a long way in stimulating local production and creating an avenue for generating FX as the sector began to enjoy unrivalled support from the government and the citizenry.

Innoson, one of the largest car manufacturers in the country, generates over 50 percent of their vehicle components locally and has staff strength of about 15,000, which consist primarily Nigerians and a few Chinese expatriates.