‘I weep whenever I see vehicles being imported to Nigeria from China’
The Managing Director, Truckmasters Nigeria Limited, Tony Arenyeka has been a part of the development of the automotive sector in Nigeria for the past 30 years. In this Interview, he shares with KINGSLEY JEREMIAH key issues that must be addressed in the sector.
Investors in the automotive sector recently urge government to pass the automotive bill into law, what will that change in the sector?
Just like any policy, foreign investors have to be assuaged. There must be assurance that there won’t be a change. And the only way to do such is to move such policy from intention to law. The process of repealing a law is cumbersome. If you look at other countries even in Africa where there is a lot more activities on automobile, it is local dealers that are establishing plants or going into joint ventures of local assemblage. If government wants a policy that will last, we need to assure global operators that Nigeria is ready. What is needed is to have a law that will back the auto policy. Policy is a statement, a guideline; it needs to move into a law. We are aware that the document was passed by the previous administration. We need the document to become law. That is when the international body like Toyota and Ford will come. What we have are dealers, who are trying to go into assemblage, in the real sense these are not the people, who are supposed to assemble vehicles. They should only be partnering with the OEM to establish plants.
Currently, local content is virtually at zero level in the sector, how do you think we can drive backward integration?
On the issue of backward integration, Nigeria government has to show the will for that to work. Industries like to operate in the favour of government so that they can operate successfully at the same time these are profit making ventures. When Obasanjo was here , he said he wants to build local auto industry so that the industries can satisfy certain political will. When government was running the sector, Peugeot components were coming from the Lagos port and another truck takes the goods to Kaduna for production and start bringing them back to market in Lagos. It is only government that can do such thing.
Automakers are looking for volume that makes commercial sense. If you look very well the international automakers group Africa into two the Northern Africans their standards are European, for Sub-Saharan Africa, South Africa is the base of most of the automakers. South Africa also has incentives, for instance if you can make 100, 000 units export there is a duty drop of about 14 per cent. They can’t get that market in South Africa alone so they must look at market where they must export those goods to. So you can’t just be producing because you want to meet economic way.
The local content issue cut across every industry in Nigeria. In our industry, how do you think components can be built here? I graduated in the mid 80s and joined the automotive industry; light bulks were produced in Enewi when Peugeot was producing seats. Batteries and tyres were produced here. We are now yearning for a level when we want them back. We were producing buses. Whenever I see buses being imported from China I weep. Between General Motors and ANAMCO, we were producing buses. When we had urban mass transit development agency, we produced the buses we were using and we sustained many industry, there was a company in Kaduna that was producing the seat, when Stallion was to start the same company approached Stallion, they had good discussion but here we are, the seats for Stallion buses were coming from India. Can you compare in terms of price to you that is producing 300 seats alone? The assurance is that when the industry bounces back, all these companies are still available.
Nigeria is huge market but there is a simple decision, Cosmas Maduka’s philosophy is for us to ban second hand, it will create a difficult situation but out of that the industry will come. We have about 400,000 of used vehicles in this market and another 100, 000 of new vehicles, 500, 000 units of vehicle market yearly is good to start a viable automotive industry. But as far as you have those leakages, the industry will continue remain import dependent.
But do you think the market is actually structured properly, most markets were automotive industry thrive have a working financial plan that allow people own new vehicles with a single interest rate?
I don’t know how we work in Nigeria. Look at the murder of the Jumia delivery man in Port Harcourt recently. That was because the outlet has a credit policy of payment and delivery. How can that company continue that kind of policy? Mandilas was selling vehicles on credit sometimes ago but the inability to pay made them retrieve those vehicles. I don’t see any bank doing consumer finance loan in Nigeria. At this stage, so many things have gone wrong. The issue of finance is serious. We have about 27 per cent annual interest rate. It is unbearable. I don’t think South Africa is doing 10 per cent interest rate. Some countries do five per cent. I don’t know how this will happen in the sector. Banks charges interest rate base on what they get from the Centre Bank and their operating cost. It is an irony when some banks declare about N100 billion profits in an economy where the manufacturing sector is suffering. Most companies can’t even pay dividends right now. There are certain structural issues that need to be looked at not only in the automotive industry so that industries can thrive. A 27 per cent interest rate will not work. It does not sink with salary and income of an average Nigerian
What is Truck and Motor Master all about?
We are a dealership. One vision is to be a one stop shop in the automotive sector. We do a lot of technical activities. We train for the government. We also have products that we sell for telematics and diagnostic. We are discussing to have more franchises. We also run maintenance service centre and generally wants to put smile on the faces of motorists.
Is government doing enough in terms of building local capacity?
The fact that they are supporting us here means government is trying in the are of local capacity. We run a one year programme here to train people on automobile maintenance and repair using latest technology. Some other workshops in the industry do that also.