Luqman Mamudu, chief executive officer of Transtech Industry Consulting and a former director of policy and planning at the National Automotive Design and Development Council, in this interview with HARRISON EDEH, spoke, among other issues, on why having a legal backing for the automotive policy would make Nigeria an automotive hub. Excerpts:
Could you please share your perspective on why the automotive bill did not scale through Presidential assent?
It was not the automotive policy that was sent to the President for assent. The policy was long enacted and signed into law since 1993. It was amended as NADDC Act, 2014. The council as its institutional framework for policy implementation is fully constituted and chaired by a nominee of the President. The Director-General is also appointed by the Presidency. What the President declined assent to was Automotive Industry Investor Confidence Bill 2018 which contained a specific programme -The National Automotive industry Development Plan (NAIDP). His reason for declining to sign the bill was, from what I gathered, based on the uncompromising comment of NIPC in reponse to presidential request for guidance. I don’t think the NIPC reached out to the NADDC secretariat for consultation before responding. Our agencies should be talking to one another. This is a problem. It would have been avoided. The NIPC was apparently not comfortable with a clause in the bill granting automotive investors long tenured Pioneer status. To the agency, it was in conflict with existing pioneer status provisions in the NIPC Act. Incidentally, there is a perfect justification for this. This would have been explained during consultation. Going forward, there should be a meeting by critical agency stakeholders to amend the bill and resubmit with or without the controversial clause.
What generally have we suffered as a nation without having a legal backing for the Nigerian automotive sector?
We have suffered non-passage to the extent that FDI in the sector has remained limited. But Nigerian investors who are mainly former car dealers have thankfully sustained investment over the period even in trickles. OEMs only deepen investment in countries or economies where policy consistency is assured and this is what the bill seeks to provide.
Can we quantify the amount of what we could have achieved, and what we have lost since we did not have a legal backing since the policy came into place in 2013?
The policy has simply lost momentum and is now threatened by traders who want to import fully built-up cars at reduced tariffs across board. This will put local investment worth over $3billion in equipment and infrastructures at risk. However, I am optimistic that once the amended bill is reintroduced or proper explanation is made to the President, he will sign it. I don’t know why so much time is being spent to do this. Honestly, I don’t know why this re-submission has been outstanding more than four months after.
What does not having a defined legal backing for the sector portend for Nigeria’s signatory to African Continental Free Trade Area?
The ACFTA is not in conflict with the automotive policy plan (NAIDP) irrespective of the automotive investor confidence bill’s plight at the moment. AFCTA reserves 10percent of over 4000 tariff lines for strategic project choice by member countries. The automotive policy is well-catered for within this band. Besides, the rule of origin applies under ECOWAS or this new continental economic union. You can’t for instance, import a car from a tariff-friendly country into Nigeria and apply to export it out to Niger as made-in Nigeria.
Could you also speak to the benefits that could have accrued from the policy if we had continued with the template laid out by the National Automotive Design and Development Plan?
The NAIDP is a very realistic plan which incorporated the reasonable interest of all stakeholders. Unfortunately, only the vexatious high tariff lines are fully in place six years going. For how long can we hold on to this? It was not meant to stand alone or in perpetuity. High tariffs are not popular as development tools these days. Marketing programmes clearly provided for in the plan have practically been abandoned along with platforms to support local component development. These are the pillars of the programme. NADDC seems to have shifted focus to training programme at the expense of these key programmes. All programmes ought to be simultaneously implemented for traction. If things were done properly, the operational capacity of the sector would have grown steadily to meet demand and the Used Imported Vehicles would have become gradually unattractive to Nigerians as new cars become affordable. Most assemblers would have migrated to CKD levels of operations where the jobs really happen. At the moment, the industry is dominated by SKD operations. A buoyant automotive sector has a multiplier effect on the whole economy. We are being denied this by the feeble effort of those charged with the responsibility to guide affairs.
How could we have made more progress and what review method would you suggest?
The review of any policy is a must during its tenure. The NAIDP has provisions for two committees- the Inter-agency Committee and the Industry Committee. These committees have not met in the past three years, yet this is the inbuilt mechanism for review. This is distinct from midterm review which is a must. These committees should be reinaugurated at once. At the same time, a mid-term review of the 10 year programme should be carried out following standard procedure. A competent independent consulting firm should be engaged through public bidding to undertake a survey of the industry. It is the report that should inform government decision and guide planning and re-planning. The NADDC put out a public call for EOI to review the NAIDP in March 2019. I don’t know what happened thereafter. I tried to find out.
The automotive policy is not the initiative of the present administration; when they came in, they opted for possible review. Could you please give us an insider perspective of what really happened?
This government has not tampered with the NAIDP. It’s just that its implementation has been plagued with extreme bureaucracy. It takes an average of 5 months to renew a one-year tenured licence for instance. Demurrage cost has piled up for APs. So, what you hear regularly is people calling on government to review or scrap the policy as they are faced with high tariff without sign of a seriously emerging local industry. But we shouldn’t listen to them. All effort should be put in place to strengthen implementation. I personally have put in so much in this industry to let it die.
Can you speak to the benefits of getting the bill signed?
Once the automotive bill is signed, the OEM will rapidly inject capital into the industry and drive the technology beyond SKD. This is the level it seems to have stagnated now. Secondly, among others, employment will rise steady in a sustainable way. The automotive industry can account for up to 15percent of GDP; you know what that means. Until you take the bill to the President, he cannot sign it. I urge all those responsible to quickly take it through the proper process and get it to the President’s table.
