There were palpable sighs of relief in the crowded hall at a hotel in Victoria Island, Lagos, during the week, when the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah assured stakeholders in the auto industry that the Federal Government would implement the National Automotive Industry Development Plan (NAIDP), and not scrap it, reports Bennett Oghifo
“The FGN has identified the auto industry as a strategic driver of industrialisation and committed to implementing the NAIDP,” stated the minister, in his presentation, ‘NAIDP: Setting a Strategic Implementation Framework’.
The ministers’ assurance was the first commitment the auto assemblers were getting from the President Muhammadu Buhari administration, since it assumed office that it would not scrap the NAIDP instituted by the previous administration for the nation’s industrial development.
The ‘Stakeholder Forum on the Nigerian Automotive: Setting an Implementation Agenda for National Automotive Industry Development Plan (NAIDP) was called by the Federal Ministry of Industry, Trade and Investment in collaboration with the National Automotive Design and Development Council (NADDC) and the Nigerian Economic Summit Group in Lagos, recently.
The minister, who said he was at the forum to listen to the stakeholders, urged them to take ownership of the policy so that they can provide solution on its successful implementation. “We will like to see ownership of implementation, including ownership and resolution of the problems that will inevitably arise, by the industry’s stakeholders.”
The minister said his presence at the meeting was to give government’s political will and to partner with the auto industry stakeholders to get the implementation solutions that are needed.
The nation, he said could not afford not to have an effective auto policy because of its importance of the auto sector as a “Key component of the Nigeria Industrial Revolution Plan (NIRP), aimed at diversifying the economy; and increasing the manufacturing sector’s contribution to GDP.
Expected benefits of a vibrant auto policy, he said include: employment generation; skills/technology acquisition; FOREX earning/savings, among others.
The NAIDP, he said was formulated to facilitate an orderly development of the auto industry but that it had suffered several implementation challenges like lack of complete buy-in by all stakeholders and the nation’s difficult macro-economic conditions.
Enalemah said there was need for complete buy-in by all stakeholders and for them to “accept where you are now, where you want to be in future and how you are going to get there. Where you are now accommodates all the mistakes of the past; all the regrets of the past. You can actually forget the things that are behind and press ahead.”
He said the macro-economy was also important and that the government had been trying to create an enabling environment because it knows that for every sector, the macro-economic environment creates the impetus for them. “If it is difficult, then it is difficult for everybody and if it helps then it helps everybody.”
The framework, he said encompassed choices to be made concerning: what the immediate to long-term goals for the auto industry are; and how activities to revive the NAIDP and coalesce stakeholders’ support should be. He said these choices must fit and reinforce one other, and should be externally consistent and reasonable in terms of market conditions, demand, among others.
He acknowledged that Nigerians were resourceful and that if they were not doing well then it was because they were operating in a difficult environment.
The implementation plan is based on the following analytical framework: the Federal Government has chosen to focus on creating an overall enabling environment; providing production incentives; agreeing and monitoring realistic output targets.
The government, he said intends to do this through continuous stakeholders’ engagement; ensuring the existence of a market for serious players through tariffs, incentives, security of land borders, among others.
However, he said the government has chosen not to focus on pulicising overly ambitious output; target in the short/medium term or introducing a new auto industry plan.
The minister said he intended to encourage dialogue across diverse stakeholder groups; achieve better alignment of objectives; identify sector bottlenecks; seek/receive any additional input to NAIDP; seek/receive input to proposed implementation plan; and agree modalities for monitoring and evaluation.
Giving statistics in his presentation, ‘The National Automotive Industry Development Plan: Current Status’, the Director-General, National Automotive Design and Development Council (NADDC), Engr. Aminu Jalal, emphasised the importance of the auto industry to the growth of the nation’s GDP.
Providing brief historical facts, the DG said some private companies started SKD (semi knock down) assembly in the 60s and that by early 70s and 80s, the federal government set up two car, and four light and heavy commercial vehicle assembly plants, assembling vehicles from CKD (completely knock down) parts, stating that “these were all privatised by December 2012.”
Regardless, he said the National automotive policy was re-launched in 2013 with a definite plan for implementation.
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The NAIDP, he said was announced with very clear fiscal guidelines and programmes to run, initially for 10 years with periodic properly phased reviews.
Its main objective is to bring back vehicle assembly operations and develop local content, he said and that to gain investors’ confidence, additional effort was made to legislate and it passed both houses successfully as a package of incentives.
He said ECOWAS has adopted the policy as one of its four priority industrial development areas, listing others as agro-processing, pharmaceuticals and construction.
The NAIDP has support programmes and one of them is standards. The DG said safety and products standards are crucial to the development of a viable automotive industry. Specifically:
Test Centre. “The NADDC and the Standards Organization of Nigeria (SON) have developed over 100 vehicle safety standards while NADDC has reached over 90% completion stage in the establishment of world class automotive test laboratories for emission, components and materials. So far about N5billion has been committed by government;
“SONCAP for Imported Vehicles: At our urging, the SON planned to start implementing SONCAP on imported vehicles by requiring that all used vehicles imported into Nigeria have a roadworthiness certificate form their country of origin. Unfortunately, this was misunderstood by the previous by management of the NCS.”
On product quality, he said vehicle assembly plants and local content manufacturers are being encouraged and assisted to produce good quality items and obtain ISO 9001 QMS quality certification.
Credit Purchase Scheme…
NAIDP provides for a credit purchase scheme to ensure that funds are available cheaply, as loans to civil servants, haulage and passenger commercial companies and the general public that patronizes made in Nigeria Vehicles.
The newly introduced levy on imported Fully Built Units (FBU) of Cars is to be applied to fund this project for which Council has procured a technical partner. Council has applied to the CBN for the proposed entity operating licensee and concessions to attract additional funding from Development finance Institutions.
The 35% levy on used vehicles has been suspended until: (a) the successful launch of the low cost vehicle credit purchase scheme and (b) the establishment of safeguard against anticipated smuggling and diversion of goods to neighboring ports.
Nigerians buy used vehicles largely because they are cheap but most have no integrity with considerable safety and environmental hazard. Money used by Nigerian to buy used vehicles can be made as down payments for new cars assembled locally.
Patronage by Government…
This would show government’s commitment to job creation and industrialisation, besides setting example for others to follow.
Nigerian Economic Summit Group…
According to the Chief Executive Officer of the Nigerian Economic Summit Group, Mr. ‘Laoye Jaiyeola, “The size of the automotive market in Nigeria is over $4 million annually. “However, this does not translate into anything meaningful for us because it is a market that is currently characterised by importation.”
Jaiyeola said the federal government’s choice of the auto industry as one of those being targeted to diversify the economy was predicated on the potential of the industry to play a strategic role in the areas of employment creation, GDP contribution, SME development in respect of automotive parts, components and services, skills development and the acquisition of technology.
The forum, he said was called to revalidate the NAIDP, agree modalities for harnessing of existing auto-clusters, as well as for the creation of other clusters, address issues of standards, skills acquisition and investment promotion of Nigeria’s automotive industry; all within an acceptable framework that takes cognizance of the fact that Nigeria is signatory to several trade agreements both regionally and or globally.
He noted that the Ministry of Industry, Trade and Investment and the National Automotive Design, and Development Council “have demonstrated commitment to making the implementation of the NAIDP a reality.”