The National Assembly has revealed how banks’ double-digit interest rates contributed to the partial failure of the National Automotive Industry Development Plan (NAIDP) 2013. One of the NAIDP’s goals was to expand the automotive industry by leveraging local resources and increasing the sector’s contribution to the national economy.

Speaking during a tour of the Coscharis Automobile Company in Lagos over the weekend, Chairman of the House Committee on Industry, Enitan Dolapo-Badru, stated that the previous National Assembly went all out to support the policy.

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

He explained that the policy, which eventually became an Act, was intended to work with the banks. He did, however, propose a legislative framework to ensure the success of any 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% 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.”

Furthermore, Dolapo-Badru praised Coscharis for taking the bold step of establishing quality assembly plants across the country, creating job opportunities for qualified Nigerians, and contributing to the sector’s Gross Domestic Product.

He did, however, suggest that the company expand beyond targeting the government for vehicle sales, emphasising that over 200 million Nigerians should be its primary market.

He said, “They are doing it like they have an assembly plant with a production line for various types of vehicles. They have to sell. There is a lot of complexity here, but who will they sell to?”

Group Managing Director (GMD) of Coscharis Group, Mr. Josiah Samuel, also reiterated the automaker’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.

He regretted that most of the government’s incentives to encourage local auto production were later changed, rendering the policy unworkable and overtaken by events.