• Wednesday, May 29, 2024
businessday logo

BusinessDay

Local component manufacturers seek tie-in to auto policy

With the Federal Government’s new automotive policy gradually gaining traction, local component manufacturers are seeking for the tie-up of the new automotive policy to ensure synergy among the two major drivers of the policy.

The component manufacturers argue that the benefits of the new policy will be fully appreciated when the auto components manufacturers are protected through legislative backing that will prevent undue competition from traditional rivals, China and India, urging that deliberate policy of backward and forward integration be encouraged.

They also call for the single-digit credit as directed by government to be monitored so that banks would not take advantage of the present situation to exploit them.

BusinessDay checks reveal that out of the 61 local component makers listed with the National Automotive Council (NAC), about 25 of them have benefitted from the N11.5 billion loan from the Bank of Industry (BoI) through the NAC at a single-digit interest rate of 7.5 percent as against the conventional 10 percent.

From a global perspective, Frank Wosy, an industry operator, says indigenous firms in many African countries have been driven away from their local markets in the past because they could not match competition from goods and services imported from abroad, many of which were of substandard quality.

The forces of globalisation and liberalisation, he says, have made it possible for many firms to serve several countries from their home markets. As competition intensifies due to the forces of globalisation and liberalisation, many indigenous firms find that they cannot withstand the competition.

Wosy observes that globalisation has enabled the world’s productivity to grow rapidly, making it possible for taste, needs, and wants to converge, a trend now termed the emerging ‘Global Consumer’.

For instance, the new automotive policy introduced last quarter of 2013 seeks to revive Nigeria’s moribund automobile assembly plants, encourage the setting up of new ones, discourage importation of new vehicles with the imposition of 35 percent duty and 35 percent levy on imported new cars and outright ban on used vehicles. The market value for imported vehicles into the country is estimated at a whopping N550 billion.

Under the new Nigerian Automotive Industry Development Plan (NAIDP), Aminu Jalal, director-general, NAC, says the parastatal is determined to encourage and assist local content manufacturers and indeed vehicle assembly plants to produce good quality products and obtain ISO quality certification.

The NAC boss says the targeting of international original equipments manufacturers (OEMs) into Nigeria’s automotive industry is strategic and will enhance overall product quality and standards.

Among the local component makers that are beneficiaries of the fund are DN Tyre & Rubbers plc; General Tyres & Tubes Co., Enugu; General Paint, Lagos; Rola Oil, Ibadan; Lawnapat Nigeria, Lagos; and Dayus Charity & Brother Limited, Osogbo.

Also on the list are Ade Johnson, Osogbo; Afro-Asia Auto Industries; DD Gamma Int’l Company; Hercules Manufacturing Company, and John Ray, Lagos. Star Auto and Ebele Journey Cycle Industries Limited, located at Nnewi, Anambra State, also got the loan.

OCE Filter Manufacturers; PCI Paints, Lagos; Iju Industries; Geoelis Cables; Henry & Henry Limited; Tilad Nigeria, and Hammed Raji & Sons Limited, all in Osogbo, as well as Oracle Business Limited, Makurdi, are also on the list of beneficiaries of the NAC fund.

Others are Peugeot Automobile Nigeria (now PAN Limited Kaduna); Innoson Technical and Industrial Company, Nnewi; A.G Leventis plc, Lagos; Proforce Nigeria Limited, Ode-Remo; Nigeria Truck Manufacturers (NTM), Kano; and Steyr Nigeria Limited, Bauchi, all automobile assemblers.

Market watchers say when fully operational, the local auto assemblers and components makers could employ as many as 50,000 Nigerians and enhance technology transfer. 

They have the capacity to produce thousands of component parts including radiator grilles, wheel covers, seatbelts, tyres, paint, vehicle cables, brake pads and linings.

Other products that can be manufactured locally are clutch disks, pressure plates, all categories of automotive fluids, fuel and filters, exhaust systems, U-bolts, leaf springs, brake shoes, windscreens, side glasses, auto plastic products, nuts and bolts, washers, fan belts, engine seatings, protectors, among others.

MIKE OCHONMA