The
Nigerian government has taken steps to support domestic production of
automobiles. This week, the Federal government launched the production of
Peugeot 301 cars at Pan Nigeria factory at Kakuri in Kaduna State. This development is geared towards invigorating
the automotive industry and is one of Nigeria’s major moves at strengthening
the manufacturing of local industrial content.
Nigeria
being an emerging economy has experienced rapid growth in vehicle sales.
According to report by Oxford Business Group, “Nigeria imports nearly all of
the cars on its roads, with 50,000 new and 150,000 used vehicles entering the
country each year. “
Governments Effort to
Bolster Local Production of Automotive
In
June, the National Automotive Council (NAC), a government agency that is part
of the Ministry of Industry, announced that it had disbursed $46m in loans
aimed at developing local production, including $20m to the Peugeot Automobile
Nigeria, $8m to Dunlop and $6.6m to Innoson Vehicle Manufacturing. Much of the
funding and focus is earmarked to develop production of automotive parts.
Reports
also says that the government is investing in skills development and workforce
training, announcing in August a partnership with the government of Brazil to
create three auto clusters in Lagos, Anambra and Kano states. The facilities
will develop local workforce capacity as part of the National Industrial Skills
Development Programme, an initiative rolled out in 2013.
Local Players in the
Industry
The
Nigerian automotive industry is a virgin territory that is scarcely populated.
The only notable local investor in the industry is Innoson Group. The firm
presently enjoys a sought of monopoly as it has no local competitor and heavily
sponsored by the government.
Innoson
Group established a vehicle plant in 2010 in Anambra state. The factory
assembles completely knocked down parts from Chinese, German and Japanese
makers to produce around 300 units per month.
The
Nigerian automotive industry is although capital intensive but it has potential
capacity to absorb more local and even foreign investors.
Policies Enabling the Automotive
The
Nigeria’s Minister of Industry, Trade and Investment, Olusegun Aganga disclosed
in a recent interview a new vehicle credit finance scheme to make new cars
affordable for four months.
With
the new financing scheme, Nigerians will be able to buy new cars assembled in
Nigeria at an interest rate of not more than 10 per cent repayable over a
period of four years.
The
Government is using automobile industry as a strategic flagship to increase
boost industrialization, skills and technology development, job creation and
foreign exchange stability.
The
new automobile policy has passed the first reading in the National Assembly and
stakeholders working hard on to fast-tracking the passage of the bill into law.
The
Nigerian Automotive is a young industry that has a ready and mass market with
great potential for growth. Early investors just like Innoson Group will have
enjoy first timers advantage.
Ryta Moemeke
