The recentpronouncement by the Federal Government that it has approved a national automotive policy that would soon put an end to the importation of fairly used vehicles, popularly known as “Tokunbo” vehicles in the local parlance, has elicited mixed reactions from stakeholders in the automotive industry and by many Nigerians.
Many, however, did not fault the government on its intention to bring back the automotive industry to its glorious past but their argument is why the Federal Government should ban the importation of fairly used vehicles when it has not put an alternative means of getting affordable vehicles in place, describing the action of government as putting the cart before the horse.
Ogundeji Samson, a lawyer, said the policy could mean well for the country but the way it was presented indicated that the government was out to dissuade people from using fairly used vehicles, which he said would not work. He said importers would device means of bringing in used vehicles if the government does not allow them to come in through the Nigerian ports, which he said would create more money for the government of the country they are coming in from.
Adedeji Adesoji, a Lagos-based car dealer, said the policy would only create more wealth for some Customs officers as importers would collaborate with them at the various borders to allow fairly used vehicles into the country, citing the recent example of when the government banned vehicles of 15 years and above from entering the country. He said government was amazed that such vehicles were coming into the country in torrents through the porous borders, denying the country of the necessary income.
Chief Executive Officer of Eddyson Dealership Limited, Eddy Okorie, said the government should have put in place alternatives before announcing the policy. “In a country where we cannot manufacture even an ordinary tyre currently, you are talking about an auto assembly plant. Even if you want to, why don’t you set up the plant first and see how it works before gradually phasing out “Tokunbo” cars? How many Nigerians can even afford new cars? he asked.
Human rights lawyer, Bamidele Aturu, said the policy was dead on arrival, saying the government was groping in the dark concerning focus. He wondered why the government could think that it could effectively establish assembly plants during the lifespan of the present administration. “Everyone knows that no such plant is possible in this administration, especially where the government is even owing states allocations. “If you are going to ask people to come and invest in the automobile industry, what is your environment like? This whole thing sounds like a joke. To me, the Federal Executive Council just thought it won’t be nice to come out and tell Nigerians they have not been working. So they decided on the policy and announced their plan for assembly plants when they know they cannot provide even one,” he said.
President of the Arewa Youth Consultative Forum, Shettima Yerima, said such a ban cannot be enforced anywhere in the world, saying that it cannot work in Nigeria. “If those in government can afford new cars, how many other Nigerians can? Why do these people formulate policies without consideration for the people they are to serve? The government can go ahead with assembly plants and allow the importation of cars so that people can make their choices. We are not slaves and you can’t, therefore, just coerce us into accepting your products,” he said.
Many stakeholders and auto enthusiasts have also argued that for the auto industry to be rejuvenated, the avalanche of problems confronting the sector must be addressed.
For instance, Lagos State Governor, Babatunde Raji Fashola, lamented recently that the harsh operating environment and other challenges have become major factors facing local assembly plants in the country.
According to him, establishing local assembly plant in the country has been tough for local automobile companies including some state governments who wish to establish assembly plants.
He said some of the problems confronting auto assembling plants in the country include government’s inconsistent policies, power failure, non-protection of local market, banks’ high interest rate and lack of local sources of raw materials, explaining that government policies still allow foreign importation of finished vehicles into the country, while heavy reliance on foreign input and the collapse of local markets were the reasons most of the country’s renowned auto plants became moribund.
The governor, however, said that the sector remains a veritable development yardstick in measuring development of the country’s economy, adding that the sector was only contributing as low as five per cent to the nation’s Gross Domestic Product (GDP) and creating employment for about 10 per cent of the country’s workforce.
Managing Director, Zahav Automobile Nigeria Limited, Nasser Jammal, said the Federal Government’s call for local companies to come set up assembly plants in the country might not materialise, saying that government has not done enough to protect local manufacturers towards such patronage, since some automobile companies are still being allowed to import finished vehicles into the country.
Jammal, whose company is into the production of made-in-Nigeria pick-up vehicles, blamed the government for the challenges facing manufacturers, adding that the sector cannot thrive unless government comes up with robust policy that will give right of first refusal to local manufacturers to dominate the local market.
According to the president and the chief executive officer of Coscharis Group, Cosmas Maduka, the country cannot manufacture automobiles now because the majority of the population is poor. “We have a population that is poor, we do not have the electric power and the flat steel required for the manufacture of automobiles.
“There are very few people that have money in this country. The number of motorcycles we are selling in Nigeria should be the number of vehicles that we should be selling. An average of 1.2 to 1.4 million motorbikes are sold in Nigeria every year. By our population, 170 million people, we should be selling over a million units of cars.”
He said new cars sold annually in Nigeria are less than 70,000 units and the number of used cars sold is about 350,000. “If you add the two numbers together, we are still under performing. We should be selling over 1.4 million automobiles in this country. Nigerians are very poor because there is no middle class. What drives the economy is the middle class. The middle class has been wiped off in Nigeria,” he said, adding that the solution is to fix power.
“If you fix power, there are going to be many cottage industries. If you fix power our refineries will work, so many cottage industries will spring up. These are the things that will create the middle class that will drive the economy,” he said.
To showcase the potential of the automotive industry and reverse its dwindling fortunes, the National Automotive Council (NAC) recently launched its 58th Investment Profile on Automotive Components to highlight the investment opportunities existing in Nigeria’s auto industry and the extant raw materials.
Speaking at the launch, the Minister of State for Industry, Trade and Investment, Samuel Ortom, said the importance of the automotive industry to the national economy cannot be over-emphasised, noting that the auto industry is vital in a developing economy like Nigeria, but lamented that Nigeria’s automotive industry, even after five decades of existence, had not been receiving enough support from local manufacturers.
The Director-General of National Automotive Council (NAC), Malam Aminu Jalal, noted that since the 1930s, Nigeria has remained a veritable market for all kinds of imported vehicles, recalling that the Federal Government established some vehicle assembly plants, including Peugeot Automobile Nigeria Limited (PAN), Leyland Nigeria Limited, Volkswagen of Nigeria (VON), Anambra Motor Manufacturing Company (ANAMCO) and Steyr Nigeria Limited.
“Sadly, all these plants still assemble vehicles with old mechanical and carburetor systems.
“Modern vehicles, including trucks, are built with a new technology; they also require specially trained experts and tools for their handling.
“The problem is how can government and its agencies, especially NAC, address the multi-faceted problems facing the automotive industry and accelerate the technological development of Nigeria, using local human and material recourses?’’ he asked.
Director-General, Raw Materials Research and Development Council (RMRDC), Prof. Peter Onwualu, lamented that the overall capacity utilisation of the automotive industry had dropped to about 10 per cent for vehicle assembly and 30 per cent for vehicle components’ manufacture.
“Government established the plants with the hope that they would reduce foreign exchange expenditure on vehicles; create many downstream industries and acquire technology. This is beside the anticipated creation of employment for skilled and unskilled workers,’’ he said, stressing the need to address the problem of local content development in the manufacturing of vehicles.
He said basic industries that would expedite local content development include plastic and rubber transformation, casting and heat-treatment industries, which he said need to be developed, stressing the need for Nigeria to emulate countries like Japan, India and Brazil, which backed up their technological breakthroughs with strong political will.
Director-General, National Agency for Science and Engineering Infrastructure (NASENI), Dr. Mohammed Haruna, said there is the need for adequate manpower training in the automotive sector, noting that increased manpower development efforts would aid the development of indigenous human resources to produce more local content of international standards in auto manufacturing sector and attract direct foreign investments.
An Assistant Director (Finance and Accounts) in NAC, Mr. David Oyetunji, who examined the challenges facing the country’s automotive industry, said the decline in the people’s patronage of locally assembled vehicles has been the bane of the automotive industry.
He noted that most Chinese auto components imported into the country are below the European standards; “yet our people spend their time, money and energy to bring them in because most of us believe that they are better.
“Go to Nnewi, you will see the cluster of automotive industries producing various vehicle components and they suffer lack of patronage because of our people’s mentality,” he said, noting that if India had been thinking the same way as Nigeria, the Asian country would still be solely dependent on the so-called advanced countries for its vehicle imports.
He said the rapid growth of TATA Motors in India was primarily due to the support given to the vehicle manufacturing company by the government and people of India.
“Today, TATA produces all categories of vehicles, ranging from small cars to heavy-duty vehicles,” he said.
The Minister of Industry, Trade and Investments, Olusegun Aganga, had after the meeting of the Federal Executive Council (FEC) recently, told pressmen that the meeting chaired by President Goodluck Jonathan, had approved the new national automotive policy, which was to encourage local manufacture of vehicles.
Aganga noted that Nigerians spent about $3.4 billion (N550 billion) in 2012 on importation of cars while they spent $4.2 billion (N670 billion) in 2010, an indication that car import takes the biggest share of the country’s foreign reserves followed by other machinery.
He said the new policy, when fully effective, will ensure the creation of minimum of 700,000 jobs in the auto industry, explaining that the new policy followed nine months of work with input from the National Automotive Council and foreign car manufacturing giants like Toyota and Nissan.
Aganga also noted that the bane of similar policies in the past, like non-implementation of policies, lack of infrastructure, and inappropriate tariff regime were considered and adequately addressed in the new one, with the Federal Road Safety Corps (FRSC) and local vehicle assembly plants/manufacturers making an input.
The minister outlined the high points of the new policy to include the establishment of three automotive clusters in Lagos/Ogun, Kaduna/Kano and Anambra/Enugu states to share resources and reduce cost of investments, as well as the development and revival of the petrochemical and metal/steel sectors and the tyre manufacturing industry to support the automotive sector.
To make the new policy work, the Industrial Training Fund (ITF) said it is also working with a carmaker, Cena of Brazil, to open automotive training centres in Nigeria while two Nigerian universities have also agreed to commence degree programmes in auto-mechanical engineering, all in a bid to provide adequate local manpower for the industry.
Aganga said appropriate tariff regimes to discourage car imports and encourage local manufacture will be put in place while government will continue taking the lead in patronage of locally made vehicles.
Meanwhile, stakeholders and industry watchers are waiting to see how the policy would work.
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