LCCI Refutes FG Claims Of Progress On 2013 Auto Policy

The Lagos Chamber of Commerce and Industry (LCCI), a key part of the Nigerian private sector, has debunked claims by the Federal Government on the success of the 2013 auto policy.

Bambo Adebowale, chairman, Auto & Allied Sector, LCCI, told BusinessDay that, “Despite the introduction of the auto policy, we still do not manufacture vehicles and we barely assemble, with most of the finance and technology for assembling still remaining foreign.”

The National Automobile Design and Development Council (NADDC) issued over 50 auto assembly licenses for a total installed capacity of 410,000 vehicles. Yet LCCI estimates the production capacity of these assembly plants to be less than 3 percent.

Morocco has about 3 assembly plants with an installed capacity of 400,000 and is planning to raise production to 1million units by 2020 which shows a higher level of efficiency in the country.

“Although there are a number of operating assembly plants functioning, only 10,673 vehicles were assembled by the end of 2016 and fewer in 2017. Local assembly is unlikely to improve in the near future because support is unstructured or difficult, but some of the policy analysis is incomplete,” Adebowale said.

The 2013 new national automotive policy is an amended version of the previous one introduced in August 1993. Its major thrust is to encourage local manufacturing of automobiles by offering protection or incentives to potential and existing local investors.

Adebowale buttressed that the policy which was developed in 2013 could now be outdated and not in sync with economic reality today. The policy was meant to, amongst other things; address the nation’s appetite for self-inflicted pain – spending N6.3trillion between 2010 and 2015 importing vehicles yet it is far from being off the vehicle import mania according to Adebowale.

He said, “When the CBN announced the fiscal policy measures for the auto industry, a key point was an increase on many HS code 87.03 items.

Duty on fully built cars became 70 percent (35 percent duty plus 35 percent levy) unless you operated an assembly plant – 24 hours prior, the duty was 22 percent.”

“There was however, no comprehensive plan for auto finance and no plan to ease out used cars then out-selling new cars 10:1 in fact, duty on used cars is 35 percent and I read a few weeks ago that the used car dealers were lobbying the Secretary to the Government of the Federation (SGF) for a waiver of duties on imported cars,” he explained.

According to Nigerian Ports Authourity (NPA) Statistics 2012 to 2017 report released by the National Bureau of Statistics (NBS) 269,386 vehicles were imported in 2012, while 280,226 came into the country in 2013 and 247,932 in 2014. Also, in 2015, import collapsed to a mere 131,994 vehicles was reportedly received at various terminals and just 105,189 in 2016.

“Falling import numbers are no surprise. A weaker Naira, a contracted GDP, limited access to forex and the need to refocus after the recession were going to impact purchases. Unfortunately, the government has chosen not to revisit the very macroeconomics in place when the policy was drawn up and introduced in 2013 (5 years ago!),” Adebowale stressed.

He advised that in order to improve the auto policy, the FG needs to put the duty on cars back to status quo ante, but ensure that importation is only by distributors/registered dealers.

“The FG should also restrict “personal“ imports of vehicles, insisting that such imports be registered and kept for a minimum of say, 2 years prior to sale – that stops the unregulated used car business. It should also enforce a total ban on imports through land borders. Imported cars will all carry certification for road worthiness from origin and sanctions imposed on for origin countries or shippers.”