Revamping Nigeria’s auto industry

With a new automotive policy that seeks to encourage and revive local vehicle assembly plants, President Goodluck Jonathan has expressed his optimism about Nigeria’s capacity to export cars in the nearer future. Though those in the business of vehicle imports have risen against the new auto policy that is perceived as a threat to their business, it is nevertheless certain that the new automotive policy sets Nigeria on the path of being a major vehicle manufacturing hub in Africa South of the Sahara. It is expected that when fully operational the new vehicle manufacturing industry will create 70,000 skilled and semi-skilled jobs along with 210,000 indirect jobs in small and medium sized enterprises (SMEs) that will supply the assembly plants.

It is remarkable that no sooner had the policy been introduced than Nissan Motor Company announced that its first made-in-Nigeria car would be rolled out this April. According to Carlos Ghosn, chief executive officer of Nissan Motors, the company is willing to set up automobile plant in the country.

This move by Nissan could pass for the beginning of the reversal of the sorry state into which the nation’s automotive industry had been plunged over the years. The country has over the decades became a one-stop dumping ground for virtually all kinds of vehicles – ‘Tokunbo’ (second-hand)  cars, buses and trucks – some of which were over a decade old.

In 2012, a total of 400,000 vehicles (300,000 used and 100,000 new) valued at N550 billion ($3.451 billion) were imported into the country, according data from the Nigerian Automotive Manufacturers Association (NAMA), the Nigerian Bureau of Statistics (NBS) and United Nations Conference on Trade and Development.

While the government’s plan to curb this trend is heartening, it would amount to nothing if the government fails to see to the upgrade of critical infrastructure that would facilitate the success of the new auto plan. As NAMA has noted, infrastructural upgrade is paramount to the success of the new auto plan and it must be a continuing process. If basic infrastructural needs such as roads, power and port facilities are adequately addressed, as promised by President Jonathan, it will boost the capacity of local manufacturers and attract more investors to the sector.

In developing infrastructure, the public-private partnership model adopted by various governments has proven to be a viable option. Government should therefore encourage the private sector to collaborate more in infrastructure development.

We hope that the new auto policy would be implemented such that it would encourage investment and technological development, reviving production activities in the industry and put local auto manufacturers on their toes to compete beyond the shores.

Countries like South Africa, Egypt, India, to mention but a few, today have vibrant automobile sectors because their respective governments did not only introduce good policies, they also put in place measures to ensure such policies are well executed.

We advise that lessons of our past vehicle manufacturing experience must be fully digested. It is not enough to have good intentions. What is crucial is that a workable plan for the achievement of these intentions is created and properly implemented taking proper consideration of the realities of the Nigerian experience and environment.

However, we commend the current move by the federal government to revamp the automotive industry and the entire manufacturing industry especially with the recent launch of Nigeria Industrial Revolution Plan (NIRP).  There is need to pull out all the stops in creating a vibrant industry such that the ambition to export cars, and fully meet the needs of the local market will become a reality sooner than later. It cannot be denied that a viable vehicle manufacturing industry will create huge beneficial multiplier effects for Nigeria’s economy and society.