Buhari aims to boost local automotive industry
NIGERIA planned to raise the portion of local manufacturing in the automotive industry to 80 percent by 2023, as Africa’s most populous country sought to cut imports and diversify the economy away from oil, the industry regulator said.
The West African nation currently imported “almost 100 percent” of vehicles, Luqman Mamudu, the director of policy and planning for the Abuja-based National Automotive Council, said this week.
Developing manufacturing and assembly plants would create jobs and reduce the $9 billion (R129.5bn) annual cost of bringing in vehicles and components, he said.
Nigeria planned to assemble 500 000 vehicles a year over the next five years, compared with 10 000 units in 2014, after awarding 36 companies a production licence, Mamudu said.
Global car makers now building capacity include Japanese companies Honda and Nissan, Ford of the US and Hyundai of South Korea, as well as local vehicle makers.
President Muhammadu Buhari has pledged to diversify Nigeria’s oil-dependent economy, which has suffered as crude prices plunged by more than 50 percent since June last year. Economic growth is forecast to drop to 3.2 percent this year from 6.3 percent in 2014, the slowest pace since 1999.
Obstacles to the new car making targets included a lack of power and rail infrastructure, Ayo Teriba, the chief executive of Economic Associates, an advisory firm, said in Lagos on Wednesday.
“It is wishful thinking,” he said. “If you have to transport your inputs by trucks instead of rail, you won’t be competitive. We have to render the business environment competitive.”
“The Nigeria government is committed to addressing the issue of rail and power,” Mamudu said. The regulator would partner with operators to “develop specialist automotive supply parks to ease set up challenges” for manufacturers, he said.
Nigeria would allow car producers to import two fullybuilt units at a discount duty of 35 percent for cars and 20 percent for commercial vehicles for every one built locally, according to Mamudu. That compared with the standard 70 percent tariff on imported cars, he said.
Equipment used to assemble cars could be imported duty free, he said. Other incentives included a crackdown on vehicle smuggling and tax holidays for producers. – Bloomberg