NIGERIA AS W/AFRICA’S AUTO MANUFACTURING HUB?

Siaka Momoh argues that the country has what it takes to be one

Why not? With a population of about 200 million, Nigeria, the most populated and the richest in the West African sub-region should no doubt be an automobile manufacturing hub for the sub-region. But big Nigeria cannot because of its infrastructural deficiency.

The automobile industry requires huge supply of power to work. It also needs flat steel sheets with which vehicle bodies are built. Nigeria has neither of these two. Nigeria’s power supply is not only inadequate but epileptic. Our steel industry is lame duck. Even if it is working, it is not designed to manufacture flat sheets.

The plan to develop the Iron and Steel Sector began with the Yakubu Gowon regime with the formation of National Steel Development Authority (NSDA) in 1971. Basir Borodo, former president, Manufacturers Association of Nigeria who has been a player in the Nigerian industrial sector for over 40 years, attested to this in an interview with yours sincerely.

The mandate of the authority was essentially to develop the steel sector. What followed was the formation of various steel companies during the General Murtala Mohammed/Obasanjo Regime. These companies started realizing their potential during the Shagari administration. The companies include Ajaokuta Steel Company, Kogi State; National Iron Ore Mining Company Itakpe, Kogi State; Delta Steel Company, Ovwian, Aladja, Delta State; Jos Steel Rolling Company, Jos Plateau State; Katsina Steel Rolling Company, Katsina State; Oshogbo Steel Rolling Company, Osun State; National Steel Raw Materials Exploration Agency, Kaduna State; National Metallurgical Development Centre, Jos Plateau State; and Metallurgical Training Institute, Onitsha, Anambra State. A mouthful; but they never realised their full potential.

The Western World, through their institutions, the World Bank and International Monetary Fund (IMF), are responsible for the stalling of the steel projects. Development of the Steel Industry in third world countries which includes Nigeria, to them, is uneconomical and so should not be touched, should not be considered. They drew on the sham David Ricardo theory of comparative cost advantage that Africa should not develop steel industry but export their raw materials to the metropolitan West and buy finished steel from them. The Soviet Union agreed to develop the Iron and Steel Industry for Nigeria; the civil works given to the West grounded it.

Ajaokuta has gone through many hands. The plant was 90 percent built by Russia’s Tyazyproexport and designed to use local ore and imported coal. Nigeria signed a concession agreement with Isp at unit Global Infrastructure Holding Ltd. to revive the uncompleted 1.3 million tonnes-per-year mill after the collapse of an earlier $3.6 billion 10-year deal with UK-registered Solgas Energy Limited. What we witnessed thereafter was the plundering of the plant’s machinery.

The point has also been made that Nigeria does not have the market to sustain automobile manufacturing. Nigeria, informed industry players have argued, with a population of about 200 million, buys only 70,000 new cars and 350,000 used cars annually. It is argued Nigeria should buy about 1.4 million cars yearly.

But it is not impossible to join the automobile manufacturing club if the gaps cited here are closed. We must however take our time. It is not something we should do in a hurry. We have the South Korea experience to draw from. The South Korea’s automotive industry is currently the fifth-largest in the world measured by automobile unit production and the sixth-largest by automobile export volume. It started with mere assembling of parts like Nigeria did. These were parts imported from Japan and the United States.

And today, Korea is among the most advanced automobile-producing countries in the world. Annual domestic output first exceeded one million units in 1988. In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signaling its coming of age.

In fact, the Korean automotive industry began in August 1955, when Choi Mu-seong, a Korean businessman, and two of his brothers (Choi Hae-seong and Choi Soon-seong), mounted a modified and localized jeep engine on a US military jeep style car body, made with the sheet metal from junk oil drum can, and military junk Jeep parts, to manufacture its first car, called the Sibal. Today, Korea exports cars in numbers that overshoot the million mark, to the Americas. In 1990 for instance, Hyundai’s cumulative exports to the U.S exceeded one million.

So what do we do? Work on power and make it work. If power works, the steel industry will work, manufacturing industry in general will work, and the middle class will bounce back. In short, the economy will fly high. What will follow are strong purchasing power and more buyers for cars.

The Korean automobile industry also grew by leveraging on strategic alliances. We can do same and insist on technology transfer. We can also grow demand by growing the BRT transport model that Lagos State has commenced. Other states can start it. Ghana has bought into it. Other countries in the West African sub-region can be made to buy into it also. All these mean bigger market for automobile.

Momoh, editor of EnterpriseNow, wrote from Lagos