The National Automotive Industry Development Plan (NAIDP) was introduced five years ago with the intention of reviving the ailing Nigerian auto industry. In this piece, ANTHONY AWUNOR examines the impact of the plan to the automotive sector so far.
In most economies, manufacturing remains the core driver of Gross Domestic Product (GDP) growth and direct employment while other sectors, particularly many services sectors are likely to increase employment on the basis of growing demand flowing from a growing GDP.
Globally, most countries lay emphases on the manufacturing industry because the sector can create jobs, boost economic health and growth at a level higher than that provided by the services industry.
It was on this basis that the National Automotive Industry Development Plan (NAIDP) was introduced on October 2013 to revive the ailing Nigerian auto industry. It was originally intended to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars popularly known as “tokunbo”.
For effective implementation, the National Automotive Design and Development Council (NADDC), a parastatal of the Federal Ministry of Industry, Trade and Investment was established by Act No. 6 of 2014 primarily to initiate, recommend, supervise and regulate policies and programmes for locally manufactured vehicles and components.
Since inception of the NAIDP 5 years ago, there have been lots of expectations from Nigeria as it concerns the development of the local auto industry, even though the plan was to be consolidated within a 10 year period between 2013-2023. Beyond the expectations, opinions are also divided, whether the plan has achieved the objectives for which it was set up.
Speaking at a recent annual training workshop organised by Nigeria Auto Journalists Association (NAJA) in Lagos, director-general of NADDC, Jelani Aliyu said that to gain investors’ confidence, the policy establishing NAIDP be passed into law.
Aliyu who gave the advice while delivering a paper on “Achieving 2013-2020 Nigerian Automotive Industry Development Plan (NAIDP) Under The Current Regime: How Feasible?” said that the Economic Community for West African States (ECOWAS) has admitted automotive industry for consideration as one of its priority development sectors.
Emphasising on the importance of legal support, Aliyu who was represented by NADDC director of special duties, David Oyetunji said Original Equipment Manufacturers (OEMs) came from South Africa to meet with the National Assembly and Vice President and implored Mr. President to put ascent on the bill as it was considered a key factor for them to establish their plants in Nigeria.
Apart from the legal aspect, other challenges the NAIDP is facing include difficult process of certification of bona fide motor vehicle assemblers/manufacture; the programs to precede the imposition of 35 per cent levy on used vehicle which can potentially undermine investment have not been realized because of investors fear of policy reversal and delays in the integration with Nigeria Customs Service to obtain VIN records and the outstanding full Buy-in of the Nigeria Customs Service due to misunderstanding of policy intent and perceived conflict with revenue collection.
For NAIDP to make further progress, Aliyu said “Nigeria Customs Service should collaborate with NADDC fully. Misunderstanding of policy intent and perceived conflict with revenue collection. Nigeria Customs Service should collaborate with NADDC fully. The policy has not been signed into law by Mr. President whose approval is most deserved and the problem of smuggling of used vehicles from neighbouring countries has not been fully curtailed”.
According to the DG, the NAIDP has inbuilt support programs to realise set targets in output, standards and skills, some of which include collaboration of NADDC with the Standards Organization of Nigeria (SON) in establishment of world class automotive test laboratories for emission, components and materials.
In addition, Aliyu said that on the directive of NADDC, the Standards Organization of Nigeria (SON), has planned to start implementing SONCAP on imported vehicles by requiring that all used vehicles imported into Nigeria have a road worthiness certificate from their country of origin.
To develop the automotive market further, Aliyu stated that all assemblers have been directed to include a low-cost vehicle in the models they roll out to enhance ease of ownership by Nigerians, adding that so far, Nissan, Hyundai, KIA, Volkswagen and others have all assembled brand new lower cost vehicles.
Speaking further, the NADDC boss said that “NAIDP provides for a credit purchase scheme to ensure that funds are available cheaply, as loans to civil servants, haulage and passenger commercial companies and the public that patronize made in Nigeria Vehicles. Council has accordingly applied to the CBN for the proposed entity operating licensee and concessions to attract additional funding from Development Finance Institutions.
“The 35% levy on used vehicles under NAIDP have been suspended until the successful launch of the low-cost Vehicle Credit Purchase Scheme and the establishment of safeguard against anticipated smuggling and diversion of goods to neighboring ports. Nigerians buy used vehicles largely because they are cheap but most no longer have engineering integrity and pose safety and environmental hazard. Money used by Nigerians to buy used vehicles can be made as down payments for new cars assembled locally. The rest will be staggered over a comfortable period”.
On patronage, he advised that government should form the habit of using vehicles made in Nigeria as that would show government’s commitment to job creation and industrialisation besides setting example for others to follow.
“Office of the Secretary to the Government of the Federation had issued a circular to this effect and Bureau of Public Procurement has commenced implementation in conjunction with the NADDC”, Aliyu said.
According to Aliyu, the federal government already has plans to inject N300bn into the nation’s vehicle assembly plants as part of measures to accelerate the development of the automotive industry.
Noting that contributions into a support fund initiated to facilitate the vehicle production finance scheme have risen to N11bn, Aliyu said the fund would equally support assembly operations at the Completely Knocked Down (CKD) level and encourage local content development.
He said presently, the auto industry activities were largely characterised by the Semi-Knocked Down operations with limited employment generated.
He said the federal government was worried by the slow pace of development in the auto industry subsector of the economy even though government had given 35 automobile firms “bona-fide manufacturing status and many of them have started assembly operation.”
This is coming about five years after the government commenced the implementation of the NAIDP implementation which was meant to encourage local production and purchase of new vehicles.
He therefore, informed that the auto support fund was an indication of the government’s resolve to provide the necessary encouragement for the development of the auto sector.
Emphasising that the automotive industry is the cornerstone for establishing a self-sustaining economy and upgrading the standard of living both in the developing and developed economy, he added that the NAIDP provides for a credit purchase scheme to provide loans for civil servants, haulage and passenger commercial companies and other members of public to patronise made-in-Nigeria vehicles.
“The council has accordingly applied to the CBN for the proposed entity operating licensee and concessions to attract additional funding from the Development Finance Institutions”, he said.
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