Auto Policy – Beaming searchlight at end of the tunnel

No doubt, Nigeria’s automotive sector has witnessed a lot of development within the past one year. It was a period where Nigeria, under the leadership of President Goodluck Jonathan, seeking to return the nation to her glorious days as an automobile assembly nation.
It was a year when the federal government introduced the new automotive policy which was designed to attract off-shore investments which have been scarce in the sector, revive the comatose automobile plants and encourage technologically advanced manufacturing activities that will lead to the production of affordable vehicles for the average buyer.
From October 2nd, 2013 when the Nigerian Automotive Industry Development Plan (NAIDP) was approved by Federal Executive Council (FEC), Olusegun Aganga, the minister of trade and investment; Aminu Jalal, director general of the National Automotive Council (NAC), and local automakers under the umbrella of the National Automobile Manufacturers Association (NAMA) have had the onerous task of defending and explaining the plan.
The move was in response to the barrage of criticisms from importers of built vehicles and other groups whose businesses are allied to the importation of new and Tokunbo (fairly used) automobiles, including those of clearing agents.
The policy eventually commenced on July 1st, 2014, and in line with the policy objectives, many fresh off-shore investments have so far been made, just as existing assembly plants are diversifying and the moribund ones are being revived – all tapping into the advantage of the favourable provisions of NAIDP, including the zero percent duty on CKD sets (completely knocked downs) and 10 percent on seem knocked down (SKDs) vehicles.
By the new fiscal measures on imported vehicles and tyres issued on November 14th, 2013 by Ngozi Okonjo-Iweala, the coordinating minister for the economy and minister of finance, as part of the NAIDP, duty on fully built (FBU) cars was pegged at 35 percent, plus 35 percent levy totalling 70 percent.
According to some schools of thought, one of the most controversial contents of the fiscal measures was that the assembly plants can import fully built cars at 35 percent duty, and 20 percent duty for commercial vehicles “without levy respectively in numbers equal to twice their imported CKD/SKD kits.”Besides, arguing that Nigeria was not yet ripe for an auto policy in view of the underdeveloped steel industry, lack of efficient public utilities like power and absence of automotive component supply base and other cluster industries, critics of the FG’s new auto policy, like the Auto Manufacturers Representatives Group, had alleged that they were not carried along as part of the process that led to the birth of NAIDP.