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Automotive industry in Nigeria: Myth or reality?

They advocated an economic option that encourages local production, including car manufacturing. This is a very gladdening development. However, let it be said that manufacturing…

They advocated an economic option that encourages local production, including car manufacturing. This is a very gladdening development. However, let it be said that manufacturing automobiles is not the same as producing rice, sugar or vegetable oil in our village farms.
The automotive industry is one of the most sensitive sectors of the economy. It occupies a critical position in the national and global economy. By rolling out a policy statement on this important industry, it is assumed that the federal government had done a thorough investigation and is politically committed to pursuing the project.
Unfortunately, Nigerian politicians, or perhaps, most politicians take delight in making empty policy statements to gain the support of the electorate. That explains why this statement generated doubts and cold reception.
The Nigerian domestic automotive production began in the 1970s through partnership between the Nigerian government and foreign companies. Six assembly plants (two for cars and four for trucks) were established in 1970-1980. These were: Peugeot Automobile Nigeria Limited (PAN) in Kaduna, Volkswagen of Nigeria Limited (VWON) in Lagos, Anambra Motor Manufacturing Limited (ANAMCO) in Emene, Enugu, Steyr Nigeria Limited in Bauchi, National Truck Manufacturing Limited in Kano for Fiat, and Leyland Nigeria Limited in Ibadan. Either due to underestimation of technological changes of the time, or lack of foresight on the impact of emerging technological revolution on automotive industry, the assembly plants in Nigeria were of low quality and became uncompetitive shortly after their establishment.  
In the 1980s, there was increased demand for smaller and technologically advanced cars worldwide. Industry analyst, Crusoe Osagie, is of the view that the Nigerian government and its foreign partners should have put major investment to reconfigure the plants to meet changing needs. Unfortunately, this period coincided with the infancy of the Nigerian automotive industry, which was struggling for investment recovery. The decision to put more investment on an already failed project proved very difficult, especially for foreign companies.
Other factors that contributed to the failure of the Nigerian automotive industry include the disappearance of the middle-class, weak import policy and implementation. The subsequent devaluation of the naira and increased inflation caused high production costs and consequently made it difficult for Nigerians to purchase the Nigerian-made vehicles.
But the new automobile policy of semi liberalised industry includes strategic review of old tariff upward for importation of new cars. This is in order to protect national market for local automotive manufacturers. The local manufacturers, on their part, are required to create significantly, good quality employment and a wide range of technologically advanced manufacturing opportunities for Nigerians.
In the new policy, a Vehicle Finance Scheme is to be established to make funds available for Nigerians for the purchase of vehicles. This will involve collaboration of both local and foreign banks to make money available to prospective car owners at the interest of 10 per cent. The rationale for this collaboration is to reduce interest and provide opportunity for Nigerians to own qualitative cars. Repayment would be over a period of four years.  The new policy also emphasizes market development, skills acquisition, backward integration, quality standard of products, as well as automobile component parts, etc.
Nigerians may not see anything spectacular about a fine-worded policy statement on automotive industry if there is no action by the federal government. Political will and enabling environment are needed dearly.
But the pervasion of automobiles with digital technologies has placed high pressure on car development departments. Added to the pressure of digital technology, the shortening of a car life cycle has created another problem of having to manufacture different models at the same time to meet various needs of special target groups. It is in this complex technology changing time that the new automotive policy in Nigeria is being unveiled.
 It is advisable that those responsible for the implementation of the new policy should avoid the pitfall of their predecessors by ensuring that high quality assembly plants are provided to make the made in Nigeria cars globally competitive. While quality cars are expected from the assembly plants, automobile manufacturers should design cars that are also affordable to Nigerians and neighbouring countries.    
Let it also be said that a major challenge to effective implantation of the new automotive policy is the general elections coming in the next couple of months. Successive Nigerian governments, present one inclusive, are good at killing policies and programmes initiated by their predecessors, however good and well-intentioned they may be. The successful implementation of the new automotive policy depends on the outcome of the 2015 general elections since it is impossible to implement this very important policy within a period of one year.
It is sad to note the continuous reoccurrence of reckless rejection of important national projects or programmes on flimsy excuses. Common knowledge and information abound that beneath such abandoned projects are worms of corruption. The revival of the automotive industry is critical to the economic reengineering of Nigeria and needs the support of all. Whichever political party wins the forthcoming elections should support this important project. Strategies may differ but the goal should be to make the Nigerian automotive industry globally competitive. The automotive industry is complex and expensive but very vital for the economic wellbeing of nations.
Aliyu is the Managing Director of Maker Network and Fair, based in Kaduna. [email protected]

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