The Nigerian Automotive Industry- A Milestone Achieved

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