• Monday, April 15, 2024
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FG’s N16bn auto fund stagnates as borrowers default


There are indications that the failure of some auto components and allied spare parts manufacturers to pay back loans granted them by the National Automotive Council (NAC) is hampering the Federal Government’s efforts at reviving some of the moribund auto assembly plants in the country.

The NAC fund is currently estimated at over N16 billion. However, lending from the fund has been hampered by increasing default by spare parts manufacturers who have accessed it.

Checks at the office of the director- general revealed that 12 companies have defaulted in paying back their loans. According to Aminu Jalal, Director-General, NAC , appropriate actions are being taken by the Bank of Industry (BoI), to ensure that it recovers loans from defaulting companies.

The NAC DG said, “There are three companies we have issues with. These companies are Hercules Ltd who are doing tyre re-treading. They are not repaying and the case is in court. Ebele Journey, doing bicycle and motorcycle parts, is in loan repayment default, and he took us to court to stop us calling in his collateral.

“Dunlop Nigeria Limited is in default, as they have closed down. However, we are part of a consortium of lenders now negotiating with Dunlop. First Bank is the lead bank.”

Meanwhile, 32 companies have benefitted so far and they include 24 auto components manufacturers/assembly plant

and eight Micro Finance Banks (MFBs). The MFBs are involved in NAC Auto Technicians Support Scheme which is meant to provide soft loans to Nigerian artisans, craftsmen, technicians and mechanics for acquisition of modern diagnostic equipment/tools for repairs and maintenance of new generation vehicles and working capital.

Meanwhile, 63 percent of the companies that benefitted from NAC Automotive Development Fund are paying back as at when due while 37 percent have not been meeting their debt repayment obligations as at when due.

Aminu Jalal said the Council is not satisfied with the level of loan repayment for obvious reasons. “Their failure to payback as at when due, has affected the Council’s efforts at reviving the auto industry and obstructed the necessary synergy for local content development and job creation,” he stated.

Their failure to repay the loans cannot be divorced from the fact that they operate in a difficult manufacturing environment where they have to provide for themselves, infrastructure such as water, access roads and energy.

Most of them depend on generating sets to power their machines, and have to contend with multiple taxation by various tiers of government, lack of protection against cheap imports from Asian countries such as China and Taiwan.

He listed the challenges of the auto industry in the country as including difficult manufacturing environment, due to inadequate infrastructural facilities, lack of patronage for made-in-Nigeria products, which affects capacity utilisation and leads to loss of jobs in the industry.