Car manufacturers and assembly plants are urging the government to quickly inject ₦100 billion into a vehicle Finance program to assist Nigerians in purchasing new vehicles and rejuvenating the automotive industry. Their argument was that this would facilitate a quicker recovery for the country’s economy. During the Nigeria Auto Industry Summit in Lagos, it was discussed that the automotive sector has the potential to drive Nigeria’s Economy forward and establish the country as a leading hub for automotive Manufacturing in Africa, as stated by Dr. Doris Uzoka-Anite, the Minister of Industry, Trade, and Investment.
Joseph Osanipin, the Director General of the National Automotive Design and Development Council, NADDC, emphasized the negative impact of Nigerians’ dependence on imported vehicles, stating that it is straining the country’s foreign exchange market and hindering job opportunities during his speech at the event. In 2023, the National Bureau of Statistics reported a significant surge in the import value of passenger cars to ₦1.47 trillion, representing a 224.67 percent rise compared to the previous year. Wale Adeniyi, the head of Nigeria Customs Service, expressed concerns about the increasing number of imported second-hand vehicles in the country.
Nigerian car market is primarily controlled by imported used vehicles.
He highlighted how this trend was negatively impacting the Nigerian currency and putting pressure on domestic manufacturers. He stated that the Nigerian car market is primarily controlled by imported used cars from various countries worldwide. These second-hand vehicles offer a more cost-effective option compared to new models and locally manufactured cars. The availability of inexpensive used vehicles in abundance suppresses the desire for new locally assembled cars, thus impeding the expansion of the domestic industry. The Nigeria Auto Journalists Association, NAJA and NADDC co-hosted the summit titled ”Developing Nigeria‘s Economy through the Auto Industry,” in an effort to promote the country’s automotive industry.
Former head of NADDC, Mr. Luqman Mamudu, and Remi Adams, who is responsible for sales, marketing, and Logistics at Honda Automobile Western Africa Ltd, along with the General Manager of Marketing at Coscharis Group, Abiona Babarinde, were all in attendance. Adams states that the federal government has repeatedly failed to deliver on its commitment to involve commercial banks, even a foreign one, in managing a planned auto financing program funded by duties imposed on imported cars.
Loans should be available exclusively for commercial vehicle operators.
Mamudu expressed disappointment over the fact that just two percent of Nigeria’s vehicle assembly capacity, which stands at 500,000 vehicles per year, was currently being used. He emphasized the importance of generating sufficient interest in the new vehicles and other products by implementing a long-lasting auto finance program. He proposed the establishment of a ₦100 billion intervention fund by the government to offer accessible loans for purchasing vehicles. Mamudu is pushing for the loans to be available exclusively for commercial vehicle operators in order to increase the presence of shared car services, buses, and trucks in Nigeria.
However, there are differing opinions advocating for the loans to be accessible to all individuals looking to purchase new vehicles. He proposed that reputable private credit firms with proven histories in Nigeria should be recognized and encouraged to take part in the rotating Loan program. The oversight of the program should be entrusted to the Security and Exchange Commission, SEC. The stakeholders have also emphasized the importance of effectively regulating the importation of used vehicles through Tariffs in order to support the continuous growth of the country’s automotive sector.
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Mr. Benedeth Ejindu, a board member of the Nigeria Automobile Manufacturers Association, emphasized the importance of implementing the National Automotive Industry Development Plan, NAIDP, to boost investor trust and rejuvenate the industry during a discussion about its resurgence. In May 2023, the National Automotive Industry Development Plan (NAIDP) was given the green light by the Federal Executive Council (FEC). The government anticipates that the system will create employment opportunities for one million individuals and encourage the use of domestically manufactured vehicles by both government entities and companies engaged in government projects.