Nigeria’s automotive industry is grappling with a lot of problems. These ranges from the refusal of presidential assent to the NAIDP bill passed into law by the National Assembly to the decimation of the middle class and inability of the low income earners to buy used or brand new vehicles and most, if not all the assembly plants are on idle mode.
In this interview with ANANT BADJATYA, Group CEO of Stallion Motors, he lamented on the narratives that has bedevilled the country’s automotive industry, but remains very optimistic of a brighter future.
He told MIKE OCHONMA, BusinessDay’s motoring editor that Nigeria’s auto industry can generate five million jobs and even contribute significantly to the country’s GDP if adequate measures are taken to develop it. Excerpt:
You have worked in various continents of the world before arriving to this country. How would you describe Nigeria’s automotive industry
Nigeria is a country of 200 million people and is the largest economy of Africa recorded about 10,000 new cars sold in 2018. So, I begin to wonder if we really have an auto industry.To put that in perspective; just consider a similar GDP per capita country like India which sold close to two million new cars in 2018.
A lot needs to be done to develop this sector which can and has proven to be a very viable way of employment creation across the world both in developing and developed countries. The country does not have the auto policy implemented yet which creates an environment of uncertainty for OEMs and investors.
Do you think car assembly plants really exist in Nigeria
Only a handful of them. Current market dynamics makes it very difficult for smaller players to really operate an assembly plant in the real sense of it as the policy and the volumes simply will not justify the investment.
Our own Stallion assembly plant has a capacity to assemble 200,000 units but we hardly do more than 5000 units. As I said, the country sold 10,000 new cars in 2018, while 300,000 used/tokumbo cars were sold in the same period in 2018.
President Muhammadu Buhari recently declined assent to the National Automotive Industry Development Plan (NAIDP) Bill after four years of legislative fireworks before the 8th National Assembly passed the Bill in 2017. What is your reaction to this
Stakeholders so much hoped for the policy to be effected because of the huge investments that have made. Auto companies have invested over millions of dollars in hopes of tapping the potential that Nigeria. It was a bit of a let-down.
We need this Auto policy to kickstart this industry in Nigeria before it is too late. I am a firm believer in diversification of the economy. Nigeria is doing well in terms of turning the focus on agriculture and manufacturing but I must say that the automotive sector also is a very viable sector which needs to be looked into with as much interest.
This sector can generate employment to about five million people and help develop the skill sets of young and ambitious Nigerians. It can absorb so many of the country’s engineers and diploma holders and provide them satisfying carrier opportunities. A well developed auto sector will have a domino effect on all related and dependent industries.
As a representative of some leading brands in Nigeria, what do you think will be their reaction, especially those that have invested in auto plants in anticipation that the bill will eventually be passed
It is sadly becoming to appear obvious that the major OEMs are almost giving up on Nigeria. Five years ago, the country was the new bride because of its massive population of about 200 million people, and also being the largest economy on the continent.
Now, the story is different because things are not at all on what they had planned and promised for. Year on year TIV is declining. Last year, about 10,000 units of new vehicles were sold in Nigeria, while Ghana, a country of population less than 30 million sold 8,000 units.
Our avoidable and inexplicable inaction is someone else’s gain. Some auto companies like Toyota, Nissan and several others are already taking advantage of Ghana’s new auto policy and have committed their investments to build auto plants that are financially viable.
The new policy in Ghana gives zero tariff on completely knocked downs (CKDs) and semi knocked downs (SKDs) making it more profitable for international brands to set up auto plant in Ghana.
What this means is that in the next five years or more when the AfCTA agreement which Nigeria is signatory to become effective, Ghana will be shipping cars to Nigeria as its viable and attractive for the auto giants.
So for the OEMs, Ghana with the new policy presents a better opportunity than Nigeria which is still uncertain about the direction for its auto industry.
This is your first time in Nigeria, can you give us your overview of the Nigerian auto industry vis-à-vis other countries where you have worked
This is my first time in Nigeria. I have worked in the US, the UK, UAE, Europe and several other countries, but Nigeria presents a unique experience for me. Auto sector has great potential but decisive action needed to be taken to develop the sector.
If India can generate 32 million jobs in the auto industry with a population of over 1 billion people, there is no reason why Nigeria with the right policies in place, cannot generate 5 million jobs from auto and ancillary businesses within the next 10-15 years.
The industry can play pivotal role in the drive for diversification as is being pushed by the government. To diversify the economy from oil to agriculture is very good, I think all the right steps have been taken and I only hope we also choose auto as a preferred industry to boost the economy. Auto can catapult the economy to a much faster growth and provide satisfying employment opportunities for the teeming young energetic and savvy Nigerians.
Stakeholders often times blame the grey market and used cars import as a threat to new sales in the country. What is your take on this
Why should Nigerians buy a used car in the first place? I had just arrived in Nigeria and vividly remember Rwandan President Paul Kagame’s speech at the launch of Volkswagen mobility in Kigali sometime in June last year when he spoke about the menace and dangers posed by second hand vehicles in Africa. He stated that “Africa does not deserve to be a dumping ground for second hand car or second hand anything’’.
Africans deserve better, Nigeria should also imbibe a culture similar to this. Only the best will do for us. Countries that are similar to Nigeria with respect to its growing population and economy have a better ratio of people going for new cars. The government has to do something to promote new cars by putting the right policy in place for the automotive sector for it to thrive locally.
Government, banks and private sector will have to work hand in hand for the success of the auto industry. I don’t think it can happen in one day, but it has to start from somewhere. Implementation of Auto Policy is the right start.
What do you think Nigeria is not doing right when compared with the South African auto industry and other developing countries.
I believe, Nigeria is one of the most endowed country in the world, no other country is this blessed except may be Brazil. Nigeria has oil & gas, fertile land, a favourable demography with 200 million people and median age close to 20. The 7th largest oil producer and a significant producer of cocoa, sesame, cashew, cassava and yet the country is struggling with poverty and unemployment.
We need to look at the auto industry as a viable job creator. It employs or has the potential to employ hundreds of thousands of people who are attached to auto servicing, spare parts, accessories, financing, leasing etc.
The Government will do well to look at industries other than agriculture to generate skill-based employability for its growing youth. The inequity between the new cars to old tokumbo cars is only increasing with the ambiguity on the auto policy.
Let’s us talk about your plans for the Stallion automobile group
Stallion is Nigeria’s foremost auto company with over eight brands and an assembly plant with an annual capacity of 200,000 units. Stallion Group will not relent in making sure Nigerians have the best of brands backed with an efficient and affordable after sales service across the country.
With the right support from the government and policy makers, Stallion plans to set up an auto park in Nigeria which will attract the best auto ancillary and spares parts companies to set up shops in the country and produce locally for auto industry. This will significantly bring down the cost of final product and will in the process bring in lot of foreign direct investment (FDI) and generate lots of skilled jobs in the country.
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