Govt patronage imperative for Nigeria’s local auto sector’s growth

NOTWITHSTANDING the interests and investment in the automotive industry value chain in Nigeria, stakeholders have hinged the growth of the sector on government support and patronage.

Already, investors are targeting to facilitate production of components and vehicles of international standard in Nigeria, thereby turning the country into Africa’s destination for automotive demands and drastically reducing employment rate in the country.

Indeed, a recent publication by PricewaterhouseCoopers (PWC) envisaged that Nigeria will produce about four million cars yearly by 2050, justifying its position on the country’s growth projections to emerge ninth largest economy in the world.

As healthy as the initiative may be, continued government support, particularly in signing patronage contracts with local assemblers is beginning to raise attention among stakeholders.

According to the stakeholders, except government, a key buyer of new vehicles, promote made in Nigeria motor vehicles by directly ordering products from the local plants, growing volume, which will attract local content builders may remain elusive.

Reacting to the issue, Chairman, Automobile and Allied Sectoral Group of the Lagos Chamber of Commerce and Industries, LCCI, Oseme Oigiagbe, said the need for local patronage of locally assembled vehicles is imperative, moreso with foreign exchange crisis unfavourably hitting the sector.

According to him, the implementation of the 2016 budget must give priority to patronage of local auto assemblers against Fully Built Up (FBU) vehicles.
“Budget as it is today does not have policy measures to discourage importation of used cars, which is a major step towards making a success of the revised auto policy,” he said.

The Managing Director, Automedics Limited, Kunle Shonaike, who cited customary circumstances across the world, said government must consider signing purchase contracts with local assemblers over a period of time which would enforce government agencies to use vehicles manufactured in the country.

According to him, that will help government to save cost and boost confidence of investors.
Automotive analyst, Oscar Odiboh, said: “The reality on ground is affecting everybody. I know of a company that has sacked half of its work force, some others are busy converting staff from full time employment to contract staff, even when it is against the labour law to do so. When government says companies should not down size, how do you want them to pay their staff when you don’t buy vehicles from them?”

He lamented over the state of the automotive industry, stating that Innoson Motors is only one of the many auto companies that are down-sizing staff.

Also speaking, Chairman of the Guild of Motoring Correspondents, GMC, a pressure group in the local auto sector, Frank Kintum reasoned that the automoblie industry plays very important roles in the economy of any country.

According to him, the Federal Government should at all times pay premium attention on issues affecting the industry as “a healthy auto industry serves a as catalyst for the growth of all other sectors, aside its contribution to the GDP.”

Kintum said: “Don’t forget that in Nigeria, we rely heavily on road transportation for both passenger and cargo movements. Hence, it is only reasonably that the government takes more seriously the implementation of the auto policy so that the country benefits in terms of value added while making use of this means of transportation. We commend the National Assembly for its promise to patronise Innoson vehicles, but it should also consider other local auto assemblers”.

The importance of the auto industry cannot be over-emphasised, as it is a major employer of labour, significant contributor to GDP, as well as a chief facilitator of technology transfer among others.

According to the International Organisation of Motor Vehicle Manufacturers (IOCA), the auto industry is the greatest engine of economic growth, just as the industry is a key sector of the economy of all major powers in the world.