Since the National Automotive Industry Plan (NAIDP) was announced by the Federal Government in October 2013, the Nigerian automotive industry has witnessed serious interest from global and local automobile brands in setting up and doing business in a very promising sector and this has been a welcome development, but my premise has yet remained that – the Nigeria automotive industry should begin to look beyond assemblage to primary production, manufacturing and exportation because we are still trailing behind in consideration of our production capacity, availability of raw materials, political will, technological know-how and market power.

*Zahav auto assembly line in Ikotun Lagos

However, we should nonetheless be grateful for the kind of interest the sector is already generating, Its a known fact that all over the world, big car manufacturers such as Nissan, GM, Toyota, VW produce only 30% of over 2000 parts of the vehicle components outsourcing the remaining 70% to component suppliers to provide thereby creating an avenue for growing local production capacity as well as creating direct employment. In this brief write-up, we will attempt to look at government’s effort in re-establishing the sector, private initiatives in taking advantages of the conducive environment provided by government and the forray of foreign investors in the Nigerian automotive industry yet so far.

Government’s effort:

Government should be applauded for putting into place the National Automotive Industry plan (NAIDP) as this has proactively charted a course for a proper auto policy frame work in the country, shortly before this policy was put in place in 2013, Nigeria and Bangladesh were the only countries in the top 10 by population without a developed automotive road map.

The auto sector is a key component in the Nigerian Industrial Revolution Plan (NIRP), the NIRP is a 5-years programme developed by the Ministry of industry, Trade and Investments to help diversify the country’s economy and revenue through industry and to increase manufacturing’s contribution to GDP to at least 6% this year and finally above 10% by year 2017 and the automotive industry has been classified strategic in this quest.

The government believes that Nigeria is well positioned to be a major assembly hub for the International auto companies due to our existing installed auto capacity, large labour force and significant local demand and also a strategic location for export hence government is taking steps to making sure the industry takes its pride of place by providing the necessary regulations, working business environment and even funding in some quotas.

Home interest:

A 2012 data estimate from the Nigerian Automotive Manufacturers Association (NAMA), the Nigeria Bureau of Statistics (NBS) and the United Nations Conference on Trade and Development (UNCTAD) have indicated that a total of about 400,000 vehicles (100,000 new & 300,000 used) valued at over N550billion were imported in that year, however, investors (foreign and local) are planning to establish and expand existing plants with appropriate incentives and fiscal measures.

In an assembly plant alone, one typical job can generate three other jobs in the components supply services and furthermore seven other jobs in the raw material supply sector thereby creating an employment chain that will push for a stronger base for the country’s Small and Medium scale Enterprises(SMEs) industry; according to a 2013 estimate, the International Organisation of Motor Vehicle Manufacturers (OICA) says the auto industry directly employs over nine million people which makes about 5% of the world’s total manufacturing employment. It is estimated that if imports were locally sourced today, it may be put at N350, 000 billion with additional value if local content programmes are vigorously pursued.

Private initiatives:

International auto companies who are looking at expanding their market base are already stationing in Nigeria because of the massive investment opportunity the country is providing, within a space of four months after the policy was put in place by government, private investment interest soared to an unexpected level with the announcement of plans by some reputable Original Equipment Manufacturers, OEMs to establish their assembly plants in Nigeria.

It took several years for some automobile manufacturing countries, like South Africa, to attract the level of attention and interest Nigeria got within four months of establishing the auto policy, rather than go to each of the OEMs to convince them to come, like South Africa did, they are lining up to come to Nigeria. Few weeks ago Honda announced in Japan that it was re-tooling its motorcycle plant to begin assembling its first 1000 units in Nigeria, Nissan has been on gorund since April 2014, Innosson has partnered with two major Chinese firms to expand its facilities, the Stallion group just announced last week it will begin assembling Volkswagen cars at the Lagos plant, Hyundai are already in Nigeria and Toyota are concluding their feasibility study, and so on and so on; government says the response of private investors has shown that the auto policy was a right step in the right direction and it should be sustained and implemented to the fullest.

The Auto Industry in Nigeria is forecasting a positive outlook already with the potential of driving national industrial development.

Tecdani