Â OUR laws mandate the National Automotive Council, NAC, to initiate policies that would aid the growth of our domestic automobile manufacturing base. NAC generates billions of Naira to carry out its duties from tariffs on imported vehicles.
Like most government agencies, NAC has fallen into the comfort zone of addressing serious national challenges with empty words. The latest NAC report on the state of Nigeria â€™s automobile industry is an indication of NACâ€™s choice of irrelevance for itself.
NAC in the report said Nigeria loses N175bn annually through importation of vehicles.
â€œThe new vehicles we import annually represent a foreign exchange outflow equivalent to N175bn. Developing countries such as Brazil, India, China and South Africa have used high import duties either to protect fledgling indigenous manufacturers or to force global car firms to invest in the development of their national motor industries. These countries now export vehicles to Nigeria,â€ the report said.
It continued, â€œThough the infrastructure and raw materials are inadequate, assembly of cars from completely knocked parts provided manufacturing value added of 40 per cent. The built-up of buses starting with only the chassis and engine gives local manufacturing value added of 60 per cent.
â€œThe vehicle assembly also provides an opportunity to gradually replace imported parts with local ones, thereby resulting in more value addition. This was the intention behind setting up of the assembly plants by government in the 1970â€˜s.â€
NAC Director-General, Mr. Aminu Jala, was more blasÃ© on the issue.
â€œOur own experience and that of other countries that developed their automotive industries indicates that we need to implement a tariff differential policy in order to create an enabling environment that would bring in more investments into the sector and further encourage locally assembly of vehicles.
â€œThe Federal Government should consider tariff as a measure to increase local capacity and not as a revenue generating instrument. An ideal tariff structure must take into cognizance all incentives and concessions, which should have a long term positive effect on local manufacturing,â€ Mr. Jala said.
Is Mr. Jala asking the public to tell the Federal Government?
The solutions are not in empty words. Some Nigerians have invested in local production of vehicles. A good example is Innoson Vehicle Manufacturing in Nnewi. It manufactures motorcycles, buses, cars, jeeps and light trucks, using a combination of imported parts and some that its other industries make locally.
Innoson is attracting attention from the ECOWAS sub-region.Â A government delegation from Ghana has shown interest in using its vehicles and other products.
While NAC is regurgitating the same lamentations that we have heard for years, local vehicle manufacturers suffer from poor infrastructure, high tariffs on imported, governmentsâ€™ preference for imported vehicles and policy instabilities that hurt long term investments.
The likes of Innoson are asking for tax breaks, better infrastructure and policies that would enhance use of locally manufactured products. If government did these, a huge part of the N175 billion would be saved, in addition to the multiplier effects that local automobile manufacturing would create.
Moreover, the public would be saved from the blinkered utterances of agencies like NAC which create impressions of helplessness and fail consistently to direct attention to the challenges of spheres under their watch.
With planned incentives and support for local manufacturers, Nigeria would meet its automobile needs and export to its immediate neighbours â€“ these are really part of NACâ€™s mandate.