Babajide Sanwo-Olu inaugurated a new car assembly plant on Tuesday, October 24, 2023. The plant is a joint venture between the Lagos State government and CIG Motors, a Chinese automobile company.
According to findings by BusinessDay, the plant located along WEMPCO Road in Ogba, Lagos will be jointly run by the state government and CIG Motors to produce different classes of brand-new cars.
The establishment of the plant was part of the bilateral agreements reached by the Sanwo-Olu administration and the Chinese Investors’ Community during the governor’s business trip to China in November 2019.
How it started
GAC Motors, a Chinese automobile maker, announced in 2019 that it was considering setting up an assembly plant in Lagos, Nigeria, following a visit to the company’s headquarters by Lagos State Governor Babajide Sanwo-Olu.
Sanwo-Olu was reportedly touring several companies in different countries in search of potential investors in the Lagos economy.
Zeng Qihong, the GAC Group chairman said that the company was already considering expanding its business into international markets and that the governor’s invitation made them optimistic about coming to Lagos.
“With the governor’s invitation, we are quite confident and encouraged that coming to Lagos would be exciting. We will look into the process of establishing an operation base in Lagos after our international business department has visited to carry out a feasibility study of the market,” Qihong said.
“We are optimistic about coming to Lagos because of the market size and the significance of the economy to Africa,” Qihong added.
The project was approved for execution in July 2021 and construction began in October 2021. The project industrial area covers a total of 35,000 square meters, and the automobile production line covers an area of 4,800 square meters.
The installation of the plants and machinery for the production line took only seven months to complete and was supervised by world-class engineers. Local employees received hands-on vocational training in the processes involved.
According to Diana Chen, CIG Motors chairman, “CIG Motors carefully studied the automobile market and met with key stakeholders to partner with in order to revive the sector by establishing a world-class automobile assembly plant in Nigeria. The plant will produce a minimum of 5,000 vehicles annually to meet market demands and redefine the sector”.
Before this partnership, the local auto industry had been plagued by growth stagnation and inconsistent government policies regarding investments in this sector, both in terms of fiscal and importation policies. This resulted in an influx of used, rickety vehicles, accounting for about two-thirds of vehicles on the road.
How it is going
The GAC Motors assembly plant in Lagos is now operational and has already assembled 2,000 brand-new vehicles ahead of its formal opening. The plant has a production capacity of 5,000 vehicles per year in its first phase and is expected to generate thousands of direct and indirect jobs.
Sanwo-Olu said that the plant is a testament to the “promising synergy” between international partnerships and local talent. He noted that the development underscores Lagos’ openness to investments that foster job creation, skill development, wealth creation, and entrepreneurial opportunities.
“The ripple effect of this investment extends far beyond the automotive sector. It has ushered in a new dawn of employment, providing our industrious youths with well-deserved jobs, thereby significantly reducing unemployment in Lagos. The skill transfer and technical training programmes initiated by CIG Motors have empowered many unemployed individuals, arming them with the requisite skills to thrive in today’s competitive job market,” Sanwo-Olu said.
The governor also noted that the LagRide scheme exclusively uses the GAC GS3 SUV and GA4 Saloon cars assembled in the state. These vehicles are produced locally to global standards to provide comfort for passengers.
Sanwo-Olu said that the Completely Knocked Down (CKD) factory, which spans 35,000 square meters, will raise the quality of life and standard of living in Lagos. It will do this by crashing the cost of brand-new GAC vehicles in local markets and reducing dependence on second-hand vehicles imported from overseas.
He said that although the plant is built to assemble cars locally, the efficiency will meet international standards. GAC vehicles, he said, are designed for comfort and easy maintenance, adding: “They are durable, well suited to our roads and climate.”