With the 21st Abuja auto trade fair coming up in November, PELUMI BOLAWA presents the agenda set by stakeholders to move Nigeria’s automobile industry to forward
On the announcement of the 21st Abuja International Motor Fair to be held in Abuja by November 2021, Nigerian stakeholders still reflect on the high cost of importing cars.
Earlier this month, the Federal Government of Nigeria, in a meeting with industry stakeholders, promised to revive the automotive sector. Nigerians are waiting for the revival, especially at a time of high rate of foreign exchange and other economic challenges in the country.
According to the Central Bank of Nigeria, dollar exchange rate stands at N410.55 while the National Bureau of Statistics puts inflation rate at 17.01 per cent.
Recent data from NBS reveals that the “non-oil sector contributed 92.58 per cent to the nation’s Gross Domestic Product in the second quarter of 2021, higher by 91.07 per cent from shares recorded in the second quarter of 2020, and 90.75 per cent from the first quarter of 2021.” This data reveals an increase in the Motor Vehicle and Assembly sector from 3.29 per cent of Q1 2021 to 4.48 per cent in Q2.
However, the data shows a drastic reduction between Q3 and Q4 of 2020 with 7.03 per cent to 2.02 per cent respectively.
In 2013, the National Automotive Industry Development Plan was initiated to improve car manufacturing in the country and in turn reduce the high rate of importation of used cars referred to as tokunbo.
In 2014, according to the NAID Plan, five of the working vehicle assembling companies (VON Automobile, Peugeot Automobile Nigeria, Innoson, Anammco and Leyland-Busan) started improving in their capacity, while seven others started operation. That led to the ‘prohibitive tariff’ that was placed on vehicles fully coupled before importation into the country. The NAID Plan also set a rebate on Semi Knock Downs for vehicles to be assembled in Nigeria.
Almost a decade after, the present administration is reiterating same to the automobile stakeholders, this time, ahead of the 21st Abuja International Motor Fair, on how to speedily implement the automotive policy.
Poor implementation, policy somersault, inflation and Foreign Exchange are still among the major challenges that automotive stakeholders have identified in the industry.
Vice President, Kia Nigeria, Olu Tikolo, stated recently in a stakeholders’ parley, “Nigeria has the market and potential to be the hub of automotive business in Sub-Sahara Africa.”
According to him, actualising the NAID Plan with relevant policies and laws means that Nigeria is on the right path to revive the ailing sector.
The stakeholders submitted that if no step is taken to revisit the automobile policy, Nigeria would continually lose income. They noted that the country was losing almost N800bn, hence a drastic need for policy review.
On the danger of imported cars, the Technical Director, Best Drive Motors Nigeria, Ibrahim Bakre, said Nigerians love to import used cars due to the high rate of poverty in the country.
His words, “Nigerians use more of foreign used cars than brand new cars. It is because the cost of brand new cars is very high compared to all those of used cars.”
Based on mechanical and economical fact, he added, second-hand cars are not safe compared to new ones, which go through material testing before they are mass-produced.
“Most of the tokunbo cars are accident cars abroad. Some of them have been affected by flood; hence, there have been some mechanical and electrical faults, which would have been why they are laying the car off.
“Getting more of these tokunbo cars, Nigeria is being perceived as a dumpsite, whereas we still buy them at huge cost. This means that we are expending huge resources on what can kill us. When most of these cars, especially the accident ones, come into Nigeria, they are being taken to autotronic centres, and the kind of panel-beating work they would do on them can’t be compared to the quality of where they made the car from,” he also said.
On solving purchasing power problem, at a meeting with the Minister of Industry, Trade and Investment, Richard Adebayo, the Managing Director, BKG Exhibitions, Ifeanyi Agwu, urged government to make available foreign exchange for indigenous automobile companies.
“You can see the cost of cars; if you say they should go to CBN for foreign exchange like any other business, then nobody can afford any car again in Nigeria,” he said.
Representative of GSC Motors, Jubril Arogundade, said for the automobile industry in Nigeria to grow, there needs to be a vibrant CKD factory. “Nigeria needs to start producing and manufacturing cars here, so that small industries can benefit from doing components and all that. That can also help us in the area of industrialisation.”
Bakre advised, “Nigeria can actually manufacture cars, but now we can still assemble them here to reduce the cost of importation and Apapa gridlock, as well as create jobs and increase technical know-how in the automobile industry.”
The determination of the Nigerian government to empower the automotive industry will not only assist in terms of assembling for Nigerians, but serve as a means of generating income from exportations. It will also reduce poverty when it generates employment for the people.
“Poverty can only be solved by industralisation,” Arogundade added.
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