WesBank venture aims to put Nigerians behind the wheel
WESBANK is planning to enter the Nigerian vehicle-finance market in partnership with the government in a project that aims to foster growth in the country’s automotive manufacturing sector.
Nigeria’s vehicle sector, while small compared to South Africa’s, is in a position to grow exponentially given the country’s large population.
The Nigerian government has been looking to diversify its economy, moving away from relying heavily on oil and focusing on other ways of increasing production. One solution has been to develop the automotive manufacturing industry.
Since 2014, WesBank and Nigeria’s National Automotive Design and Development Council have teamed up with car manufacturers to create a vehicle-finance solution that caters specifically for cars made in Nigeria.
The project is awaiting regulatory approval in both South Africa and Nigeria.
Cyril Zhungu, the CEO of WesBank Rest of Africa, said: “The main focus of the automotive policy being developed by the Nigerian government is to ensure private consumers have access to credit as well as affordable, locally assembled vehicles. WesBank will look at expanding its finance offering to a wider customer base, including corporates, under a separate strategy.”
WesBank could follow in Stanbic’s footsteps and develop a strategy for financing private vehicles as well as small businesses and corporate ventures.
Stanbic services small and medium-sized enterprises and a handful of private clients. It WHEEL DEAL: A worker assembles a Hyundai car in Lagos. The WesBank-Nigerian government initiative aims to finance purchases of cars made in Nigeria also provides loans for businesses looking to purchase John Deere or Caterpillar equipment.
Nigeria’s vehicle-finance market is small compared to South Africa’s.
Zhungu said WesBank was “looking at using this opportunity to develop and introduce alternative finance solutions that would stimulate demand for vehicle finance and locally built vehicles”.
The arrangement seeks to undercut the stringent vehiclefinancing conditions that most Nigerian banks impose on consumers wanting to finance their vehicles.
To boost car purchases and create employment opportunities, the National Automotive Design and Development Council initiative would be “exclusive to vehicles assembled in Nigeria at much lower cost and liberal terms”, said Zhungu.
“The overall objective is to create demand for local assemblers and also put downward pressure on the cost of vehicle finance.”
According to the World Bank, between now and 2030, Nigeria will need to create an additional 40 million jobs.
Currently, about two-thirds of the country’s adults aged between 15 and 64 are employed. The problem is that the great majority work in lowproductivity, low-income jobs.
Less than a fifth of Nigeria’s workforce is employed in the formal sector. Almost 50% work on smallholding farms while the rest are mostly self-employed.
The economic slowdown was the key challenge, said Zhungu. Nigeria entered a recession in the second quarter of 2016. In the third quarter, the economy shrank by 2.2% compared to the same period in 2015.
The other challenge, said Zhungu, was designing finance packages that would be affordable for most potential vehicle buyers in Nigeria. “In addition, we would have to introduce those products to market in a way that raises awareness of such facilities as well as build credibility,” he said.