LCCI Faults FG’s Automotive Policy

FG: Sector attracting foreign investors
Jonathan Eze
The Chairman, Auto and Allied Sector group of the Lagos Chamber of Commerce (LCCI), Bambo Adebowale, has described the federal government’s automotive policy as unstructured and incomplete.

Adebowale, who is also the General Manager, Nigeria/Ghana, Mitsubishi Corporation, in an interview with THISDAY, said local assembly in the country was unlikely to improve because of the structure of the policy.

The automotive policy was introduced in October 2013 by former President Goodluck Jonathan administration, to revive the ailing auto industry.
The objective of the policy was to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars popularly known as ‘Tokunbo.’

However, Adebowale argued that the policy is just one of a three-part approach to rekindling the auto industry, while the other initiatives were a basket of fiscal provisions and a support programme which have been neglected.
He noted that there are missing links in the policy in spite of the good intention of the federal government.

“We at the Chamber of commerce are surprised that for a sector responsible for over 90 per cent of passenger and freight movement, the level of attention isn’t there.
“As much as it is commendable that the current government said that the automobile development is high priority in the 2017 Economic Recovery and Growth Plan, in reality, the industry has received little structured support from the government or its agencies.
“The policy was meant to increase local component use, improve technical skills and provide employment.

“Employment figures of 500,000 were robustly announced an indication that the policy makers didn’t quite understand the auto market and were propagating academic proposals to economic situations.
“It didn’t factor in increased technology, robotics, renewable energy and the imminent death of the combustion engine.”

He explained further that when the government announced the fiscal policy measures for the industry, a key point was an increase on many HS code 87.03 items.
“Duty on fully built cars became 70 per cent (35% duty plus 35% levy) unless you operated an assembly plant – 24 hours prior, the duty was 22 per cent.

“Now, how do we plan making a success of the policy when some of key stakeholders, who stand to benefit from a properly structured auto industry, pursue self-interests – and though they are entitled to their own decisions, don’t we have an auto development council? What is the role of the Secretary of the Government of the Federation in Auto development?” he queried.

He added, “Whoever advised the then Finance Minister on the policy overlooked the fact that the development of the industry requires finance, lots of it and upfront – for investment in assembly equipment, for training of technicians, to wean users off used vehicles, to help in the purchase of assembled vehicles.
“Five years down the line, the proposed finance isn’t in place. Less than 10 of the 27 banks offer vehicle financing, but you won’t touch those loans if you depend solely on a monthly salary.

“The domino effect is that individuals and companies will turn to the cheaper vehicle market (less popular brands), the used vehicle market (tokunboh), or the smuggled vehicle market (banned car imports).”
On whether there is any honest evidence of local manufacturing of vehicles in Nigeria presently, Adebowale said, “I suppose this was part of the success that the Minister of Trade and Investment, Dr. Okechukwu Enelamah refered to recently.

“But we shouldn’t get sentimental in this matter. We do not manufacture, we barely assemble and most of the finance and technology is foreign.
“We still do not manufacture vehicles, we only assemble them, with most of the finance and technology for assembling vehicles still low and belonging to foreigners.

“Some items like rubber, plastics, glasses that are critical to automobile production were part of the 41 items banned from accessing foreign exchange through the official market.”
But the federal government has disagreed with Adebowale’s claims. Enelamah in a statement signed by his Special Adviser on Communication and Strategy, Bisi Daniels, said the government had relaunched the policy, adding that it was yielding positive results and attracting investors from across the world.
“The achievements made so far confirm the high potential of the policy to grow the automotive sector.

“Presently many assembly plants in the country are in operation. Over 14 existing assembly plants like Peugeot Automobile Nigeria Limited (PAN), Innoson Vehicle Manufacturing Co. (IVM), Anambra Motor Manufacturing Company (ANAMMCO) and Leyland-Busan have started assembling new products since 2014, and new ones have been established.

“The policy has also generated interest outside the country. Recently, a delegation of international automotive investors, comprising original equipment manufacturers and other stakeholders visited the country.”