By Omoh Gabriel
Members of Lagos Chamber of Commerce and Industry, LCCI, have expressed concern over the recently announced auto policy of the Federal Government, describing it as having potentially harmful effects on the economy and the welfare of Nigerians.
They said that Nigeria’s import dependency is only a manifestation of deeper issues of low productivity, weak competitiveness and flawed foreign exchange policy in the domestic economy.
The Federal Government recently introduced measures to save as much as N550 billion ($3.5 billion) through the reduction of imports by increasing the import duties on second-hand cars by 48 per cent to transform the automotive sector, as part of its industrial revolution plan.
A release from the Chamber by the President, Goodie Ibru, said: “The LCCI notes with concern the recent sharp increases in the import tariff and levies on motor vehicles.
“The policy has potentially harmful effects on the economy and the welfare of citizens.
“As a major stakeholder in the economy, the Chamber welcomes a policy thrust that seeks to promote self-reliance in the Nigerian economy because there is great value in domesticating spending.
“However, in pursuit of this laudable aspiration, proper po-licy sequencing is imperative.
“Import dependency is only a manifestation of deeper issues of low productivity, weak competitiveness and flawed foreign exchange policy in the domestic economy.
“It is inappropriate to begin the pursuit for a self-reliant automobile sector with the imposition of high import tariff on vehicles, when there are fundamental supply side issues to resolve. Without a good foundation the superstructure cannot stand in any economy.”
LCCI suggested that “there should be robust consultation with stakeholders in the entire value chain of the automobile sector to develop a sustainable road map for the development of the sector, which shall also take account of appropriateness of timing and sequencing of policies.
“The framework for the utilisation of the automotive development fund should be reviewed to ensure proper targeting for the development of domestic capacity for the automobile sector.
“The focus of policy at this time should be on the development of a strong supply side capability, especially in the iron and steel, petrochemical, glass and other ancillary industries.”
It said that the recent tariff review would lead to the escalation of smuggling of motor vehicles with corresponding loss of revenue to government.
The Chamber added that ethical players in the sector will be crowded out of business because of the weak institutional capacity to ensure compliance with the new tariff, as well as the porosity of the borders.