Nigeria will emerge as manufacturing hub for automobiles in West Africa – Jalal

Aminu Jalal, the Director-General of the National Automotive Council (NAC) believes that the nation’s automobile manufacturing sector has the potency to railroad the much expected industrial revolution in the country. In this interview with ITUNU AJAYI of our Abuja Bureau, he outlines strategies for the realization of this dream. Excerpts.

RECENTLY, there have been controversies about the nation’s automobile policy, as stakeholders have raised concern on the effect the policy would have on their businesses. What is your take on these concerns?

This policy has addressed all the issues raised by some of these stakeholders and I can assure you that it would work. The main aim of the policy is to encourage the assembling of vehicles in Nigeria and secondly to develop local content for those assembling vehicles so that in future, most of the vehicles we would be using in Nigeria would be assembled locally.  Though we cannot have a 100 per cent local input as no country in the world had achieved that. This is because some units are specialised and you have manufacturers who do them and again some countries specialise in some specific parts, which they export, while they too import other parts they don’t manufacture.  Auto industry is not expected to be 100 per cent self-sufficient, so we want to produce some, export some and import some.  That is the whole idea, so that at most, if we do that we would be able to achieve strategic balance in respect of foreign exchange, in the sense that our imports on auto products would match our exports.

  If you add vehicles’ parts components and tyres, they are already our second foreign exchange earners. In future, our ability to buy and import vehicles and spare parts would be dependent by foreign exchange consideration. Secondly, when you assemble and manufacture the parts locally, you get a lot of high quality jobs.  For instance, when Peugeot was assembling then in Nigeria, they had achieved close to 100 per cent local content.  They had already had over 50 companies making parts for them, employing over 2,000 people. Day to day, the technology, the raw materials and the knowledge to make these local contents were also used to bolster other sectors of the economy. For instance, if you are into motorcycle, tricycle production, you can use that knowledge to produce household goods like washing machines and so on.  So, if you have a commercial vehicle plant and you are assembling commercial vehicles, the same plant will do tractors, harvesters and so on.   Also the same plant can build vehicles like personnel carriers, tanks and other vehicles used by the defence industry. Even our train coaches and even generators are made by those who make motorcycle engines, so you will find all these linkages in the sector especially the technology we would acquire.

  All automobile industries the world over were developed by auto policy except for the initial ones like the USA, Britain, France and Germany, because they started the auto industry.   Every other economy that came into the industry thereafter had an auto policy except Nigeria.  Brazil, China India, Malaysia, Indonesia even Japan, all had auto policies. Toyota was into the textile machineries and it was Japanese government that asked Toyota to go into manufacturing of vehicles and Toyota got all the support it required. The original Toyota family was not into vehicles but minting machineries.

So, what about those raising concerns about the success of this policy in Nigeria?

That is the more reason why we needed to develop this policy.  Now there are some people who are making money in the oil sector and they think that this new move of government to diversify the economy will have a negative effect on them. Like I earlier stated, we have tried as much as possible to address those concerns. For instance, we are not saying that we would not import vehicles; the vehicles will still come in. In fact, the policy says that in the first two years, assembly plants would still import and it is still these same freight forwarders that would still clear the vehicles at the ports. The reason is that when the plants start assembling, we are aware that it will take time for them to reach economy of scale. Toyota, for instance, sell about eight models in Nigeria. If they want to assemble vehicles here, we don’t expect them to assemble all the models, as they won’t have economy of scale. If they are to assemble 25,000 units of the eight models, the average would be about 2,000 to 3,000 unit per model, and they can’t have the economy of scale, but if they do maybe, two or three and import the rest, then it means that they would be doing like 10,000 unit per model, which would make them achieve economy of scale and that would make it to be profitable. If you are producing 1,200 units, I may not set up plant to supply you but with 10,000 minimum, I can set up a plant to supply you. So, we want them to assemble limited number of models, so that they would have economy of scale so as to have local content. We would allow them to import fully built vehicles (FBU) to make up for the market, so that is why there will still be importation and it is the same clearing agents that would still be in charge of the port activities. We are hoping that in future, Nigeria would be the manufacturing hub of automobiles in West Africa. Already, the auto industry has two hubs-South Africa and Egypt, where they supply neighbouring countries and even right now, we are even getting some models from South Africa.  So if we don’t use this opportunity for Nigeria to become a hub of the industry in West Africa, investors would move somewhere else.  Already, General Motors told the minister point blank that if Nigeria would not have a good auto policy, they would move to Ghana and that they would set up for the West Africa region in Ghana. I was there when they told him this.

It is because of this policy that they are coming back and sometimes in March, the President of General Motors would be in the country to explore the possibility of an assembly plant, all because of this policy.  Since the policy was announced, Nissan, Hyundai, Voxwagen, Honda , Peugeot  that had withdrawn because of the earlier adverse government conditions like the lower tariff that was done on finished vehicles are coming back and they intend to start from June. KIA Motors and many other companies have already reached agreements with some companies to collaborate with. Even our popular ABC Transport is involved and look at Innoson, it is already expanding and going into assembling of cars now. Overall, we have over 10 companies now that would spread across the country and assemble vehicles. Leventis that had stopped production is planning to revive its plant in Ibadan. People should just be patient and give us time and I am sure those who are in doubt about the policy now will tell a different story in a year or thereabout, because investors would have commenced operations in their assembling plants then and the bulk of people who will work in all these companies would be Nigerians. So, this policy will succeed, I am very optimistic about that.

SOURCE: THE GUARDIAN

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