Uncertainty as new policy compels MDAs, contractors to buy Nigeria-assembled vehicles

Uncertainty as new policy compels MDAs, contractors to buy Nigeria-assembled vehicles

All government ministries, departments and agencies as well as companies working on government contracts will henceforth be compelled to buy locally produced vehicles in line with the provisions of the 2023 automotive policy.

The National Automobile Design and Development Council (NADDC) stated this as part of the gains of the revised policy aimed at increasing local content of vehicles produced in Nigeria to 40 per cent.

This is contained in the highlights of the just approved 2023 Nigeria Automotive Industry Development Plan obtained by Newstrends on Tuesday from the NADDC website.

It stated, “The new approved NAIDP is aimed at enabling the exponential increase in the local production numbers of vehicles, reaching 40% local content, attaining 30% locally produced Electric Vehicles, generating 1million jobs, enforcing patronage of locally produced vehicles by government and companies working on government contracts, and also boosting R&D and technology transfer.”

But auto industry players are disappointed that the decision is coming barely two weeks to the end of this administration.

They lamented that their multi-billion naira investments in assembly plants had been in doldrum due to policy summersault and change of government.

“It is uncertain that the incoming administration will not jettison the policy or embark on a fresh review,” a chief operating officer of a frontline auto firm told Newstrends.

Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, at the end of the Federal Executive Council meeting last Wednesday announced the new 10-year national automotive policy that would span 2023-2033.

He said the new policy would explore how the automotive industry could migrate seamlessly from combustible engines to electric/solar-powered engines.

He said it was an improvement over the 2013 Nigeria Automotive Industry Development Plan, introduced by the Goodluck Jonathan administration when Olusegun Aganga was industry minister.

Although many approved auto assembly plants had promptly jumped into operation then, producing semi-knocked down (SKD) automobiles and taking advantage of the zero duty regime on imported components, their business later drastically went down largely due to low patronage.

The auto industry bill also failed to get President Muhammadu Buhari’s assent and was returned for a review, expecting to get more stakeholders input.

Speaking on the new approved policy last week, Minister Adebayo said, “The whole idea is to bring it up to date with current realities. Also, to put our auto industry on the proper footing, I don’t know if you are aware that we have capacity today to assemble 400,000 vehicles.

 

“One thing that happens to the auto industry is that when the assembly or companies move into a country to make that investment, which can be anything between $300 to $400 million for the assembly plant. What happens is that the makers of the components that go into the manufacture of these vehicles also move to that country to set up competent baking factories.“

But many auto assemblers and other players in the nation’s automobile industry are not happy that vital decisions concerning the sector would come in the twilight of the administration.

They told Newstrends that nobody was sure if the incoming administration would implement the new policy.

“As we speak, no law is backing all these proposals, thus putting our huge investment in assembly plants in jeopardy,” said a major player.

Managing Director of R. T. Briscoe, Seyi Onajide, and MD, BKG Exhibition Limited, Ifeanyi Agwu, are of the view that auto policy without component makers would amount to putting the cart before the horse by starting.

“The local content suppliers must be in place first before you now talk of having car assembly plants,” said Onajide in a recent interview with the Nigeria Auto Journal 2023 édition.

He added, “If they are not on the ground, then we are just deceiving ourselves. We need to learn from our past mistakes.”

Director-General of the NADDC Jelani Aliyu, however said everything had been perfected to get the necessary approvals for the policy to become a bidding law.

Uncertainty as new policy compels MDAs, contractors to buy Nigeria-assembled vehicles