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Spare parts manufacturing, NAIDP to drive Nigeria’s auto industry growth – Experts

Spare parts manufacturing, NAIDP to drive Nigeria’s auto industry growth – Experts

The growth of the Nigerian automotive industry is hinged on reviving the nation’s spare parts manufacturing sector and signing the 2024 to 2034 Nigerian Automotive Industry Development Programme (NAIDP) bill into law.

This was disclosed by experts in Lagos at the Nigeria Auto Industry Summit (NAISU) organised by the Nigerian Auto Journalists Association (NAJA) in collaboration with the National Automotive Design and Development Council (NADDC).

Presenting a paper tagged, ‘Essential Keys for Repositioning the Automotive Industry as a Driving Force for Sustainable Economic Growth in Nigeria,’ Benneth Ejindu, board member of the Nigerian Automotive Manufacturers Association (NAMA), said Nigeria can revive tyre, battery, and glass manufacturing as a precursor to revamping local auto manufacturing.

He said Nigeria could make welded parts such as exhaust systems, seat frames, elect parts including batteries, trafficators, wiring harnesses, and plastic and rubber parts such as tyres, tubes, fan blades, seat foam, oil seals, hoses, radiator grills among others.

He said parts such as radiators, cables, filters, brake pads/linings, windscreens, side glasses, fiberglass parts, and paints, can be produced locally rather than depending on importation.

According to Ejindu, Nigeria as Africa’s most populous nation, is in a position to build its industry based on domestic demand, with exports being an additional benefit.

He said Nigeria needs to sign the NAIDP into law; develop and implement an automotive raw materials and component manufacturing masterplan and incentivise CKD assembly through contract manufacturing.

He listed some of the challenges facing the industry including inconsistency in objectives owing to non-legislation of the development policy; non-alignment of procurement policies with industrial policy; and negative effects of smuggling and uncontrolled importation of used vehicles.

“Lack of adequate engineering infrastructure, and a difficult manufacturing environment exemplified by lack of power supply and other essential infrastructure; low tariffs and tariff differentials between completely knocked down (CKD) and fully built unit FBU.

“Lack of access to long-term, low-interest funds, especially consumer finance; low level of investment; and lack of focus on improving competitiveness to bring down operating costs are some of the challenges in the industry,” he said.

Also speaking on ‘Nigeria Automotive Industry: Potential for Economic Development,’ Luqman Mamudu, a former adviser to the government on automotive policy, said there is a need to pass the amended NAIDP into law to engender investor confidence.

According to him, restrictions on the inflow of used vehicles must be managed in such a way as to ensure a balance between industry needs and consumer preferences.

He advised that all imported used vehicles including salvage must be accompanied by certificates of integrity from originating countries.

“The federal government through the Federal Ministry of Industry Trade and Investment must negotiate with countries or regions from which these dirty vehicles originate,” he said.

He said stakeholders should hold a forum with Customs for regular training on import guidelines and related provisions of NAIDP to avoid observed investment constraints on the implementation of NAIDP, resulting in the loss of N2. 3 billion in demurrage in 2019/20 by assemblers.

“To bring back commercial vehicle manufacturers on board, the government must urgently address the zero differential between the import of fully built SKD for commercial vehicles and fully built commercial vehicles which presently stands at 10 percent. This was smuggled into the NAIDP programme without consultation with the industry,” Mamudu said.

He called on the government to create an N100 billion intervention fund to drive affordable vehicle acquisition loans.

According to him, the move would create demand for vehicles built by Nigerians presently with an installed capacity of 500,000 vehicles per annum of which less than 2 percent is utilised.

“These loans should be directed only to commercial vehicle fleet operators to flood Nigeria with shared car services, buses, and trucks. This will arrest the upsurge in transportation costs and drive down inflation.

“Credible mobility private credit companies with verifiable track records in Nigeria should be identified and invited to participate in this revolving loan scheme. The scheme should be supervised by the Security and Exchange Commission (SEC),” he added.

Earlier, Mike Ochonma, chairman of NAJA, said if given the necessary impetus, the automotive industry is capable of transforming the country into a manufacturing hub in Africa.

He said the Nigeria Auto Industry Summit would produce significant information that will help the government to transform the industry.