NADDC targets 40% local content use in Nigeria’s auto manufacturing sector

The National Automotive Design and Development Council (NADDC) is putting arrangements in place to ensure Nigeria’s auto assembling and manufacturing plants raise their local content application to about 40 percent.

Speaking to journalists in Lagos last week after the tour of Honda Automobile Western Africa (HAWA) Limited Ota in Ogun State and Bajaj Industries Nigeria Ltd in Ikeja, Joseph Osanipin, director general of NADDC, said the current local content application in the nation’s auto manufacturing sector is between 5 and 10 percent on average.

According to him, Nigeria needs to grow that number to about 40 percent to position the sector as an enabler of economic growth.

The Council, he said, has identified some low-hanging fruit of actions that can be done immediately to grow the local content use in the industry.

Read also: Nigeria needs to invest in manufacturing like China to create jobs — Duggan

“We have seen some components that are being produced in Abuja, Nnewi and Lagos. So, we are going to create an arrangement where the auto manufacturers and component manufacturers will meet.

“We can now work with both stakeholders to look at the issues of quality and standards of the locally-made components because in some cases the components will be available but may not meet the specifications of the auto assembling plant. By coming together, we will agree on the things to do differently to ensure components produced locally are up to standards,” Osanipin said.

He said the Council initiated the tour of assembling plants in the country to measure Nigeria’s capability, find out the challenges, discover the human capital development level and raise the local content in components used in auto manufacturing and assembling in Nigeria.

The Council, he said, has seen the challenges faced by the stakeholders and it would work with other agencies and ministries to resolve them.

“We will also set up desks that will ensure that issues and challenges faced by our stakeholders are promptly resolved without delays,” he added.

Earlier during the tour of the Honda Manufacturing Plant in Ota, Ogun State, Remi Adams, head of sales, marketing and logistics at HAWA, said the plant can assemble CKD to fully built vehicles.

He said plans are on to move into full manufacturing of vehicles in Nigeria but the plan is being stunted by poor patronage, especially from the government which is the biggest buyer of auto products.

According to him, the Honda Plant has an installed capacity of 10,000 per year but the plant is presently doing about 2000 units per year.

He said the over-reliance of Nigerians on imported used and salvaged vehicles is also impacting the business of local assembling plants.

Adams said the company is faced with the challenges of sourcing foreign exchange as the company has a backlog of unsettled FX payments that may result in order cancellation by Honda Motors in Thailand, the official supplier of OEM components.

Takashi Nakajima, managing director of HAWA, said that Honda is not getting the needed patronage from the Nigerian market which explains why the plant is assembling below capacity at the moment.

“We need the market and demand because we are not producing to stockpile in the plant rather we are producing to sell but we don’t have the customers that we expected in Nigeria.

“We want the government to restrict the importation of used cars and to look into the issue of auto financing. The interest rate is very high and can discourage customers from buying new cars. Therefore, we want government to come in here to support customers,” he said.

Read also: Nigeria’s manufacturing investment hits 3-year low as economic woes worsen

Also speaking, Mazhar Abbas, plant head at Bajaj Industries Nigeria Ltd, said Bajaj is the largest producer of two-wheeler bikes and tricycles in Nigeria.

He said Bajaj can assemble 2,000 two-wheeler bikes per day and between 100,000 and 200,000 per year depending on the market demands.

According to him, the market demand has conspicuously come down due to government policies such as the banning of the use of bikes in some cities.

He said Bajaj is currently assembling about 1,000 units of tricycles monthly depending on the market demand.

In terms of local content addition, he said, the company is currently looking for component manufacturers in Nigeria that would supply the plant with the needed parts, adding that there is a lot of fabrication that is done at the plant as well.

Abbas said that FX fluctuation is also affecting the business and that government policies such as banning the use of two-wheeler bikes are affecting the demand for bikes in Nigeria.