N20bn to fund 500 vehicles as Creditcorp auto finance kicks off

Stakeholders and auto industry players have expressed mixed feelings over the N20bn consumer credit fund to stimulate demand for locally assembled brand new vehicles.

Many of the stakeholders who spoke with Daily Trust said the auto finance scheme, which is a critical component of the Nigerian Automotive Industry Development Plan (NAIDP) that has suffered over a decade of implementation, was coming rather too late.

This is just as an analysis by Daily Trust indicated that the N20bn scheme could only purchase less than 600 vehicles at an average of N35m per vehicle.

A check on some locally manufactured vehicles by Innoson Vehicle Manufacturing (IVM) indicated that prices range between N25m and N35m depending on the models. Some models on the Innoson line up cost as much as N100m.

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The scheme, which was launched by the Nigerian Credit Corporation (Credicorp) in partnership with the National Automotive Design and Development Council (NADDC), was designed to make a single-digit loan available for vehicle buyers.

The intent was to increase patronage of brand new vehicles, which has become highly inaccessible with many Nigerians resorting to used vehicles known as Tokunbo, which is also currently on the high side due to high exchange rate.

For instance, used vehicles bought at N3m three years ago now cost over N10m due to the high exchange rate.

Speaking at the official launch/agreement signing between Credicorp and the National Automotive Design and Development Council, NADDC, in Abuja, the Managing Director/CEO of Credicorp, Engr. Uzoma Nwagba explained that the fund aims to eliminate barriers faced by consumers in buying automobiles on credit.

On his part, the Director-General of the NADDC, Mr. Joseph Osanipin stressed the need to improve the demand side of the automobile market in order to grow the industry.

Daily Trust reports that there were 56 indigenous assemblers licensed by the federal government under the 10-year NAIDP launched in 2014 with an installed capacity of over 500,000 units of vehicles per annum.

Due to low patronage, which would have changed if the NAIDP had been passed into law, only about six of them are still functioning and at extremely low capacity while the majority of the technicians employed have been either converted to after sales or are out of jobs.

N20bn scheme too paltry, coming late – Stakeholders

Speaking with our correspondent, Deputy Managing Director of CFAO Motors, Mr. Kunle Jaiyesinmi said while the N20bn scheme was a welcome development as the country is starting from somewhere, it is rather too paltry and coming too late.

He said this is because most auto assemblers have closed shops while the few still operating were working at low capacity.

He said, “The N20bn scheme is even belated because when the Auto Policy started about 10 years ago, the 35 per cent tariff that’s being charged on Fully Built vehicles, the understanding we had then was that part of it would go to the Auto Financing and the other part would go to Automobile Assemblers’ facility.

“In 10 years nothing happened and we know how much has been collected by the federal government from that levy.

“So N20bn is a paltry amount and the scheme is coming up a bit late. Looking at the local assembling, how many assemblers are we really having in Nigeria? Those of us that started eight, nine years ago, almost all of us have really packed shops. So, this is coming a bit late but at least, it’s still better, let’s start from somewhere hoping that people trying to access the loan can have it easily and it can be facilitated very promptly without any bottleneck.”

Former Director of Planning at the NADDC, Mr. Luqman Mamudu said the N20bn can only fund about 500 vehicles for consumers but said “It is sufficient as a commitment to Nigeria Automotive development program (NAIDP) launched in 2014.”

In a chat with Daily Trust, he said, “As provided for in NAIDP, it is meant as seed fund from NAC (National Automotive Council) levy expected to attract additional funding from others like DFIs and even Nigerian commercial banks and the Consumer credit Corp itself, who I believe are managers of NADDC automotive purchase window.

“The Nigeria Automotive Programme Act has funding provision to be sourced from the statutory levy on all automotive imports collected over the years by Nigeria customs.”

He added that given the government’s current commitment to make transportation affordable with subsidy removal, other additional special government funding dedicated to automotive only might be in the offing.

Automotive Consultant, Dr. Oscar Odiboh stated that the introduction of Creditcorp represented an improvement in the automotive sector, saying, “There is more funding in terms of the pooling of resources, funds that can create more competition, make people less restive when it comes to auto ownership.”