The Nigerian Auto Industry As Component for National Prosperity

The Nigerian Auto Industry As Component for National Prosperity

‘’Africa doesn’t deserve to be a dumping ground for second hand cars or second hand anything’’ President Paul Kagame of Rwanda at the launch of Volkswagen’s assembly plant in his country in 2018.

The Nigerian auto industry has an estimated worth of $30 billion, with about million people who depend on road transport, million registered vehicles, 1 million units of new cars, 500,000 trained technicians, assembling capacity for 450,000 vehicles, 400,000 dealers of automotive spare parts, inventory of 350,000 new and used vehicles. The nation has annual used vehicles imports of 250,000 units and over a 100,000 unregulated automobile dealers, according to Bambo Adewale, Chairman Auto Group of Lagos Chamber of Commerce and Industry.

To reduce the appetite for imported new and used vehicles into the country, the National Automotive Design and Development Council  was established to initiate and recommend programmes for locally produced vehicles and components, but it is seen as a major bottleneck by industry operators due to its duties which they say is promoting the non-competitiveness of the sector.

Due to the Presidential decline of assent to the National Automotive Industry Development Bill passed into law by the 8th National Assembly which would have enabled Nigerians to afford new vehicles and led to job creation in areas such as ride hailing drivers, industrial designers and product developers, electrical and electronics engineers, mechatronics engineers, embedded system programmers and developers, user experience and interface developers, software engineers(front end, back end, machine learning engineers), data scientists, etc. to boost Nigeria’s technological and industrial development, other African countries are wooing foreign Original Equipment Manufacturers with favourable auto policies to set up assembly plants in their countries.

The Ghanaian auto policy was announced in December 2018 and passed into law by President Nana Akuffo Ado in August 2019, attracting 35 percent duties on new fully built vehicles (FBU), 4 year maximum for used vehicles, zero tariff on completely knocked down and semi knocked down vehicles, and an attractive financing structure with a coordination team compared to Nigeria’s 70 percent levy on new FBUs, regulation which allows 15 year vehicles to be brought in, absence of structured finance, etc.

This is the major carrot which has attracted major OEMs like Toyota to set up assembly plants in Ghana since it is more profitable. Possibly, when the ACFTA becomes fully effective, cars will be produced in Ghana and exported down to Nigeria their major market.

Despite the frictions, indigenous brands like Coscharis Group (which recently established a partnership with Renault SA of France to assemble their vehicles in Nigeria), Elizade, Globe Motors, Peugeot/Dangote and Stallion Group (the leading player with an assembly plant capable of churning out 200,000 units with plans to establish an automotive park in the country which will play host to the best auto ancillary and spare parts companies to produce locally), are poised at deepening the capabilities of Nigeria’s automotive industry as an enabler for economic prosperity.

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