‘Auto Policy raising job losses, smuggling’
The Automotive Policy initiated by the immediate past government of Nigeria has increased job losses at the ports. It has equally raised smuggling levels, according to Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI).
The immediate past government of Goodluck Jonathan introduced the Auto Policy, which led to over 21 pledging to set up assembly plants in the country.
Several car makers have set up local assembly plants and a few others have announced plans to begin assembly soon. Isuzu Motors Limited in collaboration with Koncept Autocentre Limited, its Nigerian distributor, recently announced plans to start truck assembly in the second quarter of 2016. CFAO Yamaha Motors has also commenced motorcycles assembly, while Innoson Vehicle Manufacturing Company Limited has unveiled its new IVM Fox hatchback and the IVM Umu saloon cars at the company’s plant in Nnewi, Anambra State.
Innoson vehicles are made up of about 70 per cent locally sourced contents, according to the local content analysis done by the Nigerian Society of Engineers (NSE).
The policy approved 35 percent levy and 35 percent duty for imported vehicles. However, Yusuf said the tariff system had led to smuggling and diversion of automobiles to other West African countries as importers now chose to evade the high tariff regime.
“People now divert vehicles to Cotonou. What it means is that government is encouraging smuggling, thereby losing revenue,” Yusuf said.
“Now ask yourself, how many made-in-Nigeria vehicles have you seen, compared with the demand? People that are making their living in the maritime sector are losing their jobs. Go to Roro Port (Tin Can Island) and they will tell you stories,” he said.
“And where are the car manufacturers? The few that are doing something just bring in components and couple them. Is that manufacturing? And yet you give them generous concessions. All the car dealers are in trouble, especially those doing their businesses ethically,” he added.
The LCCI DG said the combination of auto policy and the foreign exchange control of the Central Bank of Nigeria (CBN) had resulted in the loss of the Nigeria Customs Service’s revenue by as much as N300 billion, adding that the exchange regime were also preventing exporters from repatriating their foreign exchange.
“There is no incentive for them to bring back their foreign exchange, because the CBN will ask you to convert it at N199/$, when the market rate is as high as N250/$,” he said, adding that the FX policy was killing local capacity.
The CBN excluded 41 items, some of which are raw materials for factories, from the accessing FX from the exchange market. The apex bank said it took the decision to encourage import substitution and the local manufacturing sector.
“But some of the industries import some components. You see, if you are in production, it is possible that 20 percent of your input will be imported and 80 percent sourced locally. If you don’t have the 20 percent, you cannot complete the production process.
What the exchange control has done is to disrupt a lot of business operations, because even if your foreign input is ten percent, you cannot produce if you don’t have it. Even if you have to export, you may have to re-export. That is, you can import, add value and then export. This is why one of the biggest problems any country can have is not to have liquidity in its FX market,” he stated.
ODINAKA ANUDU