Private investors have put in over N500 billion in the development of Nigeria’s automotive manufacturing industry, according to Jelani Aliyu, the director-general of the National Automotive Design and Development Council (NADDC).
Despite investing in building vehicle assembly plants across the country, the industry is still producing below capacity as many Nigerians still depend on importation to meet the demand for cars.
BusinessDay understands that policy inconsistency by the government and high exchange rates, as well as a scarcity of foreign exchange, are among the issues affecting the growth of the industry in Nigeria.
First, the non-signing of the much-awaited Nigeria Automobile Industry Development Plan (NAIDP) bill into law after several promises by the Federal Government that the present administration will see to the enactment of the bill, has also limited the growth of the industry.
Second, the short supply of foreign exchange and the high rate of exchanging naira to the dollar that makes it near impossible for businesses in Nigeria to access forex at the Central Bank of Nigeria’s official rate is seriously hurting the auto industry.
Vehicle assembly plants in Nigeria need to bring in vehicle spare parts and vehicular components in completely knocked down (CKD) and semi-knocked down (SKD) formats for the cars to assemble locally.
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Kunle Jaiyesimi of the Auto & Allied sub-Sectoral group of the Lagos Chamber of Commerce and Industry told journalists that the failure of the present administration to pass the Nigeria Automobile Industry Development Plan is affecting the industry negatively.
As a result of that, he said that the policy which ought to have been implemented in phases starting with semi-knocked down SKD1, SKD2 and SKD3, and expected to have progressed to CKD by now, is still at SKD.
According to him, the poor performance of the nation’s steel industry is also affecting the production of parts needed to manufacture vehicle spare parts in-country.
While pointing out that companies now prefer to bring in Fully Built Units (FBUs) than assemble in Nigeria, he said that is why only less than six assembly plants are now operational in Nigeria.
Meanwhile, NADDC boss listed companies such as Dangote, Sinotrucks, Innoson, Elizade, Lanre Shittu, Honda West Africa, Mikano and Nord among those that are currently producing vehicles in the country.
Aliyu said that these companies and their assembly plants are located in Lagos, Nnewi, Kaduna and Kano while some are beginning to come up in Bauchi, Kano and Ogun states.
He added that the aforementioned companies have a combined capacity of producing up to 400,000 vehicles per year.
Giving his view on the impact of the 2014 automotive policy, Kenechukwu Udo, a Lagos-based car dealer told BusinessDay that he does not see the value being added by the assembly plants to the nation’s economy.
He said that many Nigeria will not be able to afford cars that are assembled in Nigeria because they are usually brand new and very expensive cars.
“How many Nigerians can afford brand-new vehicles? This is why over 75 percent of Nigerians still rely on used cars popularly known as tokunbo to meet their personal car use. It is only big companies in Nigeria and the government officials that are patronising the assembling plants,” he added.
Recall that the Federal Government initiated an Automotive Policy in 2014 to provide a framework that will support automobile companies, encourage local manufacturing of vehicles and phase out the importation of used vehicles.
The policy known as the Nigeria Automobile Industry Development Plan, represents the Federal Government’s bold step at reviving local car assembly in over three decades. It is also targeted at creating jobs, stimulating the value chain, diversifying the Nigerian economy, and providing affordable cars to Nigerians.
