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AGF advocates Asian funding model for Nigeria’s bleeding auto industry

Nigeria’s bleeding auto industry
For Nigeria’s fledging automotive industry to be back on track again and increase its production capabilities, the country must draw experience and lessons from the funding structure of India, China and South East Asia.
Speaking at a day stakeholders conference organised by the National Automotive Design and Development Council (NADDC) at the Transcorp Hilton Hotel, Abuja, Ahmed Idris, accountant-general of the federation in a speech tagged, ‘The Impact of the Automotive Industry on the economic growth of Nigeria: Lessons from China, India and South East Asia,’ he identified seven key sources of funding model the Nigerian government can adapt to development the automotive industry.
Idris said advanced economies funded the development of their automotive industries through 100 percent equity participation, public private partnership (PPP), foreign direct investment (FDI) and Outward Foreign Direct Investment (OFDI). Other sources are through the establishment of automotive fund, joint venture (JV) agreement and equity partnership through 100 percent ownership. 
He regretted that the progress made during the boom era of local auto manufacturing by Peugeot Automobile Nigeria (PAN), Volkswagen of Nigeria Limited (VWoN), Lagos, Anambra Motor Manufacturing Limited (ANAMMCO) and Steyr Nigeria Limited, Bauchi, National Trucks Manufacturers (NTM) Kano, and Leyland Nigeria Limited, Ibadan, was short lived as most of the plants were now shut down.
The establishment of the assembly plants in the country at that period created a lot of job opportunities across all segments of the population and across every occupational groups such as artisans, professionals, secondary, post-secondary graduates and graduates of tertiary institutions.
The AGF lamented that the country’s automotive sector plundered into the present precarious situation as a result of poor policy implementation, high tariffs, poor economy, lack of refunds, epileptic power supply and poor leadership by success administrations.
He said lessons from China indicated that according to Chinese Automobile policy, a Chinese automobile company could form joint ventures with multiple foreign car manufacturers. Instead of exporting cars to China, foreign car companies can form JVs with Chinese carmakers to directly produce cars in China. This accounted for two thirds of the passenger vehicle market.
As a result, vehicle prices dropped by 33 percent from 2004 to 2009. The decrease in mark-up from intensified competition accounted for about one third of this change and the rest came from deductions through the learning curve experience.
The AGF called for the replication of the Chinese experience in Nigeria by inviting OEMs to form JVs with local auto assemblers, even as expressed optimism that, the vibrant market exists in the country to persuade these firms to establish in Nigeria.
There is also need to close the nation’s borders against vehicle importation from abroad; government should as a matter of policy revamp the iron and steel industry that is a necessary pre-requisite for the survival of the automotive industry.
Furthermore, he advocated that, the enabling environment/infrastructure like electricity, road, rail network and security are very essential for the industry, while the need to sponsor an automotive bill to ensure continuity and consistency of the funding policy of the automobile industry should be pursued with vigour.
This way, the funding policy will outlive any government and ensure continuity irrespective of the government in power.

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