Automotive Stakeholders Fault FG-VW German MoU

Line inspection workers check out a Volkswagen AG 2012 Passat at the company's factory in Chattanooga, Tennessee, U.S., on Wednesday, June 1, 2011. Volkswagen of America Inc. reported May sales of 30,100 vehicles, a 27.9 percent increase from a year earlier. Photographer: Mark Elias/Bloomberg via Getty Images

By Chris Uba

The nation’s automotive stakeholders have advised the federal government  to be careful with the Memorandum of Understanding (MoU) it signed recently with Volkswagen AG (VW) of Germany, saying that MoU is fraught with danger that may be inimical to the economic interest of Nigeria.

They said that it would be unthinkable that VW would construct a vehicle assembly plant in Nigeria when it has already reached an agreement with the government of Ghana to set up one in that West African country.

According to them, the real   intention of the MoU is to make Nigeria a dumping ground for VW products assembled in Ghana to the detriment of the country.

They advised   the federal government to go back the archive to review a similar agreement General Yakubu  Gowon’s  administration signed with the VW and which led to the establishment of Volkswagen of Nigeria Limited and an assembly plant in 1975, in order not to plunge the nation into economic disaster

It would be recalled that penultimate Friday,

 The federal government and Volkswagen  recently signed an MoU  to develop a joint vision for an automotive hub that would cover the West Coast of Africa.

The MoU, which was sequel to the recent visit of Chancellor of Germany, Angela Merkel to the country, was signed in the presence of both the guest and President Muhammadu Buhari, in Abuja. The Head of Volkswagen Sub-Saharan Region, Thomas Schaefer, signed the agreement on behalf of Volkswagen with the Nigeria’s Minister of Industry, Trade and Investment, Dr. Okey Enelamah.

Reacting to the news on the MoU, one of the stakeholders who does not want his name in the print,  said: “From what I have read in the media about the MoU, it is not  clear what the Germans wants in West Africa. It appears VW of Germany is up to something in West Africa. They did not say anything about VON. VON Automobile does not have VW as shareholder because it acquired 40 per cent and 11 per cent equity holding of VW and BHF bank both of Germany.

The current owners Barbedos Motors also acquired Federal Government’s 35 per cent and Mandilas Motors combined 10 per cent ownership. What is left as Nigerian interest in VON Automobiles is Lagos State Government’s four per cent.”

 According to him, “the issue therefore is: Is VW buying back its shares in VON Automobile or setting up a new plant? Is FG reversing her privatisation policy by making fresh investment in what is ordinarily private sector activity? It would have been best if government facilitates partnership between VW and Nigerian investors in a new assembly plant.

Another stakeholder, Dr. David Obi, who is a member of the National Council of the Manufacturers Association of Nigeria (MAN) and Chairman, Motor Vehicle and Miscellaneous Assemblies Sectorial Group of MAN, told THISDAY he read the story but had not seen the details of the MoU, wanted to know if VW AG is coming repurchase the Volkswagen of Nigeria.

He said if the German automaker is putting up an assembly in Ghana, it  will not be in the interest of Nigeria. Because, according to him, what Nigeria needs are companies that will establish in Nigeria to creates jobs and contribute to the economic development of the country. If VW establishes a plant in Ghana it is not likely replicate the same in Nigeria. He said if VW puts up an assembly plant in Ghana, that plant will service the Nigerian market.

Dr. Obi, who is the Chairman of DVC OBI Group, noted, however, that the Germans  are honest people when it comes to doing business. He blamed VW AG exit from VON on the Nigerian government which allowed unbridled importation  of used vehicles into the country and lack of patronage of locally assembled vehicles government institutions and companies.

He said that Nigeria had developed 40 per cent local content for Peugeot Automobile of Nigeria (PAN) and VON but with the influx of used vehicles in the country, these vehicle assembly plants could not survive, hence the foreign partners left.