‘High interest rates disrupting automotive industry development plan’

Chairman of the House Committee on Industry, Enitan Dolapo-Badru, has blamed the high interest rates charged by deposit money banks for the disruption of the National Automotive Industry Development Plan 2013.

One of the main focuses of the Nigeria Automotive Industry Plan was to expand the automotive sector by leveraging local resources and increasing the sector’s contribution to national prosperity.

Speaking during a tour of the Coscharis Automobile Company in Lagos, Dolapo-Badru noted that the previous National Assembly pushed for the policy implementation, but the banks’ high interest rates frustrated its actualisation.

According to him, the National Assembly also approved N10 billion for the National Automotive Design and Development Council but regretted that the banks’ demand for approximately 28 per cent interest rates from prospective vehicle buyers derailed the policy.

He explained that the policy, which eventually became an Act, was intended to be achieved in collaboration with banks before the financial institutions backed out due to high interest rates.

He proposed raising a legislative framework to ensure the success of future automotive campaigns in the country, emphasising that rather than involving banks in such schemes, auto assembly plants should lead the project.

He stated: “That scheme was supposed to work with the banks, but the banks cut it because, on their part, they told the consumers to come and pay 28 per cent or so interest on loans. So, it did not work, but we are currently developing a scheme in which commercial banks are completely excluded.

“You cannot ask someone who is struggling to eat to come and buy a car. You cannot tell me to come and pay 35 per cent interest on N20 million, for example. That interest rate alone could cover school fees and feed the family for a year. You cannot add expenses to an individual’s already strained budget.

“The way forward is for assembly plants and the National Assembly to devise a scheme that will encourage the purchase of new products. The buyer can be guaranteed for the next ten years. The scheme must be able to accommodate customers.”

Additionally, Dolapo-Badru hailed Coscharis for taking the bold step of establishing quality assembly plants across the country, creating job opportunities for qualified Nigerians.

The Group Managing Director of Coscharis Group, Josiah Samuel, reiterated the automobile industry’s readiness to address the sector’s existing gaps.
Samuel explained that as soon as the automotive policy was implemented, the company focused on it in the hopes of expanding the sector in Nigeria.

“If there is any policy, or programme to help to engender and improve production, I think we are here to embrace it. So, 10 years ago, we praised the auto policy, and we quickly engaged our partners, we started a Semi Knock-Down plant in one of our factories at Ikeja to enable us to quickly key in, and concurrently as it were, we started working with our partner, Ford Motor Company to build a new factory at our Awoyaya factory.

“There were a whole lot of things in the auto policy that were to help in driving demand because it is a game of numbers. The policy on how to curtail and gradually reduce the importation of used cars is a single-digit finance scheme to incentivise those who want to buy new cars. That was also in place,” he said.