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Concerns mount over review of auto policy

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A RoRo vessel taking vehicles at the port.

A RoRo vessel taking vehicles at the port.

The last may not have been heard about the controversies trailing Nigeria’s auto policy three years after introduction, as maritime operators and stakeholders continued to pick holes in the regulation aimed at encouraging auto firms to set up assembly plants in the country.

The Technical Committee on the Review sat last week, but stakeholders in the sector are concerned on the areas earmarked for review.

The National Automotive Industry Development Plan (NAIDP) was introduced in October 2013, to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars (popularly known as Tokunbo cars).

This policy has largely affected the inflow of revenue to operators and the Federal Government through the Nigerian Ports Authority (NPA). Indeed, the auto dealers estimated that Nigeria is loosing over N800 billion to the policy, hence the call for urgent review in line with the current impact on the economy.

The President, Maritime Workers Union of Nigeria, Tony Nted, recently revealed that the volume of vehicles imported into Nigerian Ports has ‘collapsed to an all-time low’, with consequent loss of jobs in the maritime industry.

Nted noted that in the last two years, the number of vehicles arriving in Nigeria had shrunk by almost two-third, while the volume of cars smuggled through Cotonou continued unabated.

“It is therefore necessary that the Federal Government reviewed its stance on the auto policy, not to inflict any more suffering on the workers, who are already having hard times from price increase.

“The Federal Government should look rather at making the importation of cars and trucks more competitive to enable the economy grow. A significant reduction for the duties applicable on cars and trucks will go a long way to alleviate the challenges of our people and spur economic activities,” he said.

As the intrigues on the review gathers momentum, the Managing Director of the Nigerian Ports Authority (NPA), Hadiza Usman, has also thrown her weight behind the move.

Usman said: “We are discussing with the Federal Ministry of Trade and Investment regarding where we are following the automobile policy, because federal government needs to review some of its policies to determine the benefits that will accrue to the government following the period of implementation.

“There’s been a period of implementation of the automobile policy. There’s a need to relook at it to determine the opportunities lost by the federal government vis a vis the automotive industry. This is ongoing.

“We’ll aggressively sustain this discussion to ensure that in a timely manner the government concludes its assessment of this policy and takes a decision on the way forward as it relates to the revenue being lost within the Authority and also the development of the automobile industry itself.

National President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, in a petition to President Muhammadu Buhari, made available to The Guardian, said the implementation of the auto policy is having significant impact such as the diversion of cars carrying vessels to neighboring West African ports as a result of high duty tariff on vehicles. This has also led to the reduction of the maritime work force by 70 per cent, which affects mostly Licensed Customs Agents, Importer, dealer and Nigerians abroad.

The policy, according to him, has also led to reduction of activities of terminal operators by 70 per cent, and the relocation of Nigeria freight components like terminal charges, ships dues and shipping company operation to other West African ports, which should have accrued to Nigerian port operators.

This, he said, has also triggered massive smuggling due to the high demand for motor vehicles in Nigeria.

The policy has also resulted into high transport cost as a result of the increase in; tractor truck (8701), commercial buses (8702) from five per cent and 10 per cent to now 35 per cent; trailer and semi trailer, which attracted five per cent is now 35 per cent. This has increasingly affected the cost of transport of person and goods by the addition of 30 per cent duty with other charges such as Value Added Tax.

He urged the government to study the state of the old assembly plants built around the 80s and 90s and the reasons for their closure, and see if the same reasons will not impact on the new auto policy.

Amiwero however suggested that the Federal Government should review areas in the policy that concerned: the domestic demand and availability of locally made vehicles for Nigerian market; the graduation of Nigerian vehicles based on international standards, which grouped both light vehicle and heavy (cubic capacity) under the same tariff of 35 per cent – 70 per cent

He said the government should also consider the obligation of World Trade Organisation (WTO) on tariff reduction and local content, as it relates to Nigeria’s tariff at 35 per cent and levy at 35per cent (totaling 70 per cent).

To him, another major area that needed review is the incentive that are tailored to benefit a few through massive importation of Fully Built Units (FBU), which contravenes global automotive standards.

He said the high duty of 70 per cent on motor vehicle for a country that controls almost 75 per cent of regional market, create demand gap, revenue loss to the government and private sector and massive employment losses.

Comparing the Global Automotive Tariff Duty rate of Ghana and South Africa, Amiwero said Ghana complied with global automotive industry standards by the graduation of the automotive import on the bases of cubic capacity from 5 per cent for 1.6c.c, 10 per cent exceeding 1.6 to 3000 c.c, from 3000 c.c up by 20 per cent for motor cars, while South Africa reduced tariff on light vehicles and component, with tariff being phased down even faster than required by WTO obligation.

He therefore stressed that the ECOWAS Common External Tariff (CET) on uniform tariff for Ghana and Nigeria, should be used as a reference point due to developmental priorities within the sub- region.

According to him, the number of assembly plants and the model of vehicles produced by them, the capacity of their production with reference to the Nigerian market as the biggest market within sub-Saharan Africa should also be considered in the review.

Amiwero also suggested that the review should also consider the fate of the transportation system in Nigeria where (commercial buses, trailer, trucks and semi-trailer attracts 35 per cent while that of Ghana is five per cent, which will eventually affect the movement of persons and goods due to non availability of local supply. The 35 per cent tariff increase without corresponding development of local assembly plant, would only create few beneficiaries of massive import and lead to a high cost of the Nigeria made vehicles which is not affordable to the common man.

Meanwhile, the Managing Director and Chief Executive Officer, Ports and Terminal Multiservices Limited, Ascanio Russo said government has lost about N400 billion to the national automotive policy.

He said that the annual vehicular importation through the country’s ports now stands at only 10,000 units, down from the average figure of 30,000 new vehicles.

Before the revival of the auto policy in October 2103, about 700,000 used and new vehicles were imported into Nigeria annually, with the new vehicle figure standing at 50,000 units, but now, Russo said the number of vehicles imported through Nigerian ports has gone down by 60 per cent, as more vehicles imported by Nigerians are destined to the Port of Cotonou.

According to him, Nigerians now import older vehicles, as their buying power wane, doubled with the high rate of tariffs paid on the imported vehicles. This amounts to several other risks, such as a polluted environment, increased cost of maintenance and cost of living as well as increased cost of purchasing cars.

The Minister of Industry, Trade and Investment, Okechukwu Enelamah, had at a stakeholders’ forum in Lagos, said government would not reverse the policy, adding that the current attempt is meant to evaluate and improve the plan for maximum result.

Enelamah said the present administration would create enabling environment, which would give incentives to complement efforts of the stakeholders.


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1 Comment
  • Ogugua Enoch

    The hawks are coming again. Note that Clearing Agents, Port Operators, NPA etc are more concerned about their revenue.
    Government should not tamper with the Auto Policy. The main stakeholders who are building or have built their auto assembly plants are focused on moving the Nigerian economy forward full time.
    The sentiment/intrigue/politics that delayed the removal of subsidy on petroleum products for several years is being touted here.
    Minister of trade and investment please do not listen to them. Any policy that will not fasttrack the assembly/production of automobiles in Nigeria must not be entertained. Any policy review should only be on encouraging the local manufacturing/assembly plants.