Years after the automobile policy was introduced by the federal government, a maritime lawyer; Mr Emmanuel Nwagbara, has said that until the necessary things are put in place, the policy will not work.
Nwagbara, who disclosed this in a chat with Shipping Position Daily last week in Lagos, also fingered power as one of the major challenges facing the development of the automobile industry in the country.
He maintained that it will be difficult to talk about vehicle assembly without adequate power supply, stressing that the government will be quick to rush into policies without considering if the environment is conducive.
He said: “I think recently one international figure while speaking about the problems of Nigeria identified power as a very serious challenge to the development of Nigeria as a country. Without adequate power we cannot really talk about small scale and medium scale industry. And without adequate power you cannot even talk of big enterprise in Nigeria like vehicle assemblage, manufacturing and all that. So you find out that policy makers in Nigeria just think up of policy and begin to implement without looking at whether the environment is right for the implementation of that policy, that is what has happened to the automobile policy and why we find ourselves grabbling with the automotive policy”.
“So the auto policy will remain a problem until we do the first thing first, for me, the policy is not working because the right environment for that policy to succeed is not there, we still contend with very high exchange rates. We still contend with lack of adequate power and therefore the environment is not right for the implementation of auto policy and it will not work”, he argued.
Explaining further, Nwagbara said that the implication of the policy not working is that there will be high rate of smuggling, saying that at 70% import duty rate, smuggling of vehicles will be inevitable.
“And then what is the implication of the auto policy not working, the implication is that there is very high rate of smuggling of new vehicles into Nigeria. At 70% duty rate, you cannot but not see the monster called smuggling in place because these vehicles at 70% become too expensive.
Therefore there is an incentive to smuggle the vehicles into Nigeria without paying any duty. Because by the time you evade 70% of the price of the vehicles, you can sell brand new vehicle at 70% of the cost of the one that is brought in legally into the market. Place side by side with the one that was brought in legally into the market, a smuggled vehicle can go in at 70% of the one that was legally brought in. And that becomes a disincentive for the person or company that will manufacture vehicles in Nigeria because the company will look at the price of imported auto into Nigeria at the open market and then, makes his calculation based on the going price in the market for a new auto manufactured in Nigeria”, he stressed.
He maintained that smuggling is a disincentive to automobile assembling in Nigeria.
“And when he finds that he can compete, then he goes into manufacturing, now in a situation when you have an automobile that was brought in legally into the market selling at for example, N5million and you see the same type, quality of auto being smuggled that is sold at N4million and the manufacturer who sets out to manufacture will be competing with the seller who sells at N5 million, you find out that he will have a disincentive”.
According to him, “you find out that there is a disincentive because smuggled vehicles will foist a low price on the vehicle manufactured in Nigeria and when he funds his power and he also imports his spare parts at a particular rate of exchange, you find out that there is a disincentive and it will not work. So we need to get it right and get the environment right”.