Market News

By Theodore Opara

AS more auto companies shut their assembly plants in Nigeria, local assemblers have blamed the Federal Government for making vehicle production and the general business environment unfriendly for indigenous manufacturers.

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They spoke at a recent interactive forum in Abuja, where auto chief executive officers and relevant Federal Government ministries and agencies MDAs met to assess the state of the nation’s auto industry and the way forward.

The auto assemblers accused the FG of luring many investors into setting up auto assembly plants in Nigeria after the introduction of auto policy in 2014 but failed to sign the enabling bill into law to support the business.

They also claimed that the Finance Act of 2020 introduced by the FG that reduced import duty on fully built vehicles to the same rate as Semi-Knocked Down components made it difficult for local assemblers to compete with FBU importers/dealers.

Deputy Managing Director of CFAO Motors, Mr. Kunle Jaiyesimi, said, “We wasted millions of dollars in a world-class assembly plant for buses and trucks. Virtually all leaders of government agencies that visited the plant then were amazed by what they saw. Today, we’ve converted the plant to after-sale centre.

“There is no way we can compete with fully built vehicles that are coming into the country. Before, the import duty on FBU truck was 25% and suddenly it was dropped to 10%, the same rate for SKD components of truck.

He also accused policymakers of jumping out of the country to hold meetings with vehicle manufacturers without discussing with Nigeria’s representatives of those foreign companies.

He said, “We should not be thinking about estacode (travel allowance) in most cases. We should look at how things can work in this country.

“What is the fate of the auto policy now? When this initiative started in 2014, some of us raised concern then that it is not enough for some people to just wake up and put up a position paper about the industry without consulting widely the industry players and stakeholders.”

Executive Director, Nigeria Automotive Manufacturers Association, Remi Olaofe, wondered how the local auto assemblers could break even without any serious support and patronage from the government.

“Nigerian auto operators are doing their best but they are not being encouraged at all. No single tyre is being manufacturer in the country since the exit of Dunlop and Michellin. How do we bring them back? What do we tell them? Nobody is in business to make losses. I do business to make money, not on sentiment.

“Many have invested billions in this auto business and we are not doing anything to support and keep them in business.”

Olaofe accused the Nigeria Customs Service of being “a pain in the neck of this business,” adding that they had practically ruined the business.

“Look at all the auto assembly lines of the plants in the country, they are virtually idle. People are allowed to cut corners and play the trick of winners take all and many are shut out. Nigeria ultimately loses. We don’t have correct industry data because of unhealthy rivalry in the business,” he said.

He also said, “The NADDC will not allow NAMA to function because NADDC is deriving pleasure in assemblers coming directly to it for aid. The Ministry of Finance will not allow NAMA to work because it wants operators to come to them individually with their problems so they could be ‘appreciated’.

“Look at Rwanda, they have overtaken us. What is the population of Ghana? It is now the toast of auto manufacturers and allied products’ investors. Every single auto assembler now is on its way to Ghana. “There is no need lying to one another. If we must develop the nation’s auto industry, we should do so genuinely.” 

Chief Executive Officer, Nord Automobiles Limited, Oluwatobi Ajayi, said the country’s approved plants had the capacity to produce sufficient number of vehicles to cater for its immediate need only if there would be continuous patronage, duty and tax incentives.

For instance, he said his assembly plant currently producing five vehicles per day would be able to increase the number to 25 vehicles with the right support and raise it to 50 per day with two shifts.