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Nigeria: Business group seeks delay in take off of Nigeria’s automotive policy

A leading member of Nigeria’s business group, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), wants the government to delay the take off of the new Automotive Policy until March, 2015, according to local media reports.

The local Vanguard newspaper on Friday quoted the NACCIMA President, Alhaji Badaru Abubakar, as saying that the delay would become necessary to enable stakeholders resolve the lingering controversies generated by the policy.

“It is also to reach a consensus on how to effectively implement the policy for the benefit of the sector’s investors and the economy at large, he said.

“Having reviewed the lingering controversies between government and auto industry stakeholders on the implementation take-off date of the new auto policy in Nigeria, the chamber wishes to add its voice by expressing some concerns on the short moratorium period given on the effective take-off date of the policy,” the chamber President said.

The implementation of the new automotive policy was  to begin in the third quarter of 2014.

Last year, the Nigerian government introduced a new comprehensive auto policy, aimed at encouraging local production, discouraging import and encouraging backward integration.

But since the announcement, the policy has generated a lot of controversies and mixed reactions from stakeholders in the automobile industry.

NACCIMA believes that if the policy is implemented at the time the government wants it, it will not only affect its members to operate optimally but also negatively affect sustainable transformation of the economy as it would lead to fall in demand of imported used vehicles.

According to Abubakar, “This will invariably affect negatively the transportation sector; erode the welfare of the citizens by reducing their purchasing power; breed unnecessary monopoly due to privilege/insider information about the government policy; result in increase in unemployment, low income, inflation, among others.

“To ensure that the good intention of government on this policy initiative becomes a reality if well harnessed and implemented and probity brought to bear in the overall interest of all stakeholders, the citizens and the economy, we counsel that there is need for the Federal Government to put its house in order before commencing full implementation of the policy.”

The chamber maintained that if the policy implementation begins before March 2015, it is capable of further encouraging diversion of cargoes to neighboring countries.

NACCIMA said that the implementation of the sharp increase in import duty on fully built vehicles to 70% (35% duty   35% levy) from 22% (20% duty   2% levy), will place the cost of vehicles beyond the reach of about 90% of Nigerians, increase the cost of transportation by at least 50%, increase inflation level, create huge gap between demand and local supply capacity of automobiles due to infrastructure challenges.

According to him, “Today, supply stands at a pathetic 45,000 units while demand stands at 800,000 units annually, smuggling activities from neighboring countries will boom, especially from the Cotonou Port, with imported vehicles still dominating the market place.”


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