Exciting developments are in progress to position Nigeria as a significant contender in the vehicle manufacturing sector, as stated by the Minister of Industry, Trade and Investment, Doris Uzoka-Anite.
During the launch of the Nigeria Automotive Industry Development Plan, the minister made this declaration at an event that brought together stakeholders from both the private and public sectors.
The aim of the automotive industry development plan, according to Uzoka-Anite, is to establish Nigeria as a fully-fledged vehicle manufacturer within the next decade.
Uzoka-Anite emphasized, “Nigeria possesses the resources needed to manufacture its own vehicles. We have the raw materials, skills, market, and now a strategic plan to facilitate vehicle production, which ranges from motorcycles and tricycles to sedans and heavy-duty trucks.”
“With this plan, we envision Nigeria achieving full-scale vehicle production within 10 years. Our objective is to make vehicle ownership more affordable for the average Nigerian.”
In support, the Director-General of the National Automotive Design and Development Council, Joseph Osanipin, highlighted a proposed policy to aid in realizing the plan: a five-year tax incentive for vehicle assemblers in Nigeria.
He explained, “Through such financial incentives, there is a deliberate emphasis on backward integration and component manufacturing.”
The committee tasked with implementing the Automotive Industry Development Plan comprises representatives from the Ministries of Finance, Transport, Environment, Industry, Trade, and Investment, as well as the Nigeria Customs Service, the Manufacturers Association of Nigeria, and the Standards Organization of Nigeria.
The previous year saw Nigeria’s vehicle assembly sector, estimated at approximately N302 billion, plummet to a new low due to rising production expenses and declining demand for domestically manufactured automobiles.
According to the Manufacturers CEOs Confidence Index, the activities in motor vehicle assembly and miscellaneous industries dipped further below the benchmark (50 points) from 48.6 to 46.7 points.
In the second quarter of 2023, expenses related to production and distribution surged by 17.3%, while shipping costs rose by 14.7% for sector participants.
Capacity utilization in the industry dropped by 5.6%, leading local assemblers to reduce their workforce by 5.7% during that period.
The release of a policy for the automobile industry in 2014, which granted licenses for auto dealerships in Nigeria, helped forestall the threat posed by the importation of used vehicles that could have undermined the partnerships established by the Nigerian government with foreign car manufacturers back in the 1970s.
The Federal Government’s 2014 Automotive Policy aims to provide a supportive framework for automobile companies to enhance local content and establish a vehicle financing program to assist citizens in purchasing new cars.
However, despite the policy, the government’s reluctance to support locally manufactured vehicles, along with inadequate regulations, has presented a challenge for the industry.
Presently, Nigeria only produces less than 10% of the vehicles used within the country.