NASS’ obsession for foreign SUVs threatens economy, local plants – Stakeholders
The plan by the National Assembly (NASS) to spend over N5.5b on imported Sports Utility Vehicle (SUV) is generating fresh concerns among stakeholders, especially its impact on the on local vehicle industry and the state of the economy.
The disclosure by the ad hoc Welfare Committee of the Ahmad Lawan-led Senate of plans to embark on the purchase is coming barely four years after some senators staked about N6.6b on imported brand new luxury vehicles.
The move, which is a blatant breach of the All Progressives Congress (APC)-led Executive Order Three, which mandated patronage of made in Nigeria goods and services, according to stakeholders would further affect investment drive into the country, especially in the automobile sector and leave wrong signals for public servants at a time that concerns are being expressed against the high cost of governance in the country.
While more than 6, 721 Nigerians have already sued the Senate over this development, most stakeholders deplore lawmakers’ refusal to opt for cheaper means of transportation or ploughing the fund into the local automobile industry, thereby preventing such hefty sum from leaving the economy.
Being Africa’s largest economy and the most populous black nation in the world, Nigeria, in 2013, reportedly imported vehicles (mainly fairly used) worth $6.2b.
In 2014, passenger vehicles were reported as the second-largest import in Nigeria after petroleum oils or bituminous minerals. It was against this backdrop that the Federal Government in 2013, introduced the National Automotive Industry Development Plan (NAIDP), aimed at creating an enabling environment for manufacturing of Nigerian-made vehicles, and turning the country into an automotive hub capable of exporting vehicles to other West African countries among other key benefits.
The policy jerked up import tax (duty and levy) for new vehicles to 70 per cent, while an import tax (duty and levy) of 35 per cent is placed on commercial vehicles; while that of used cars stood at 35 per cent.
However, in the midst of the lack of seriousness that greeted the policy, especially as the NASS has failed to give prompt attention to a bill seeking to establish an automotive Act as a way of guaranteeing investors’ confidence, and speeding up economic development in country, Toyota Motors recently revealed its intention to establish a plant in Ghana instead of Nigeria.
A director at Germaine Auto, Maryann Chukwueke, said though building vehicle plants would require multi-million dollar investments, ploughing N5.5b into a local car manufacturing plant would have sent the right signal or woo investors in that line of business into the country.
Insisting that the move was a direct lack of motivation and incentive, a development, which would push investors away from the country, especially when local goods are not patronised, Chukwueke said the current situation was capable of retarding the growth of the nation’s economy.
Former Managing Director of Peugeot Automobile Nigeria (PAN) Limited and Vice Chairman, Nigerian Automobile Manufacturers Association (NAMA), Ibrahim Boyi, blamed the collapse of the hitherto vibrant sector on actions similar to the behaviour of the current crop of lawmakers.
“In the days of the original industrial plan in the 1970s and 1980s, agencies of government were very strict and enforced all elements of the policies diligently. That saw the growth of the industry, with the likes of PAN, VON, and ANAMCO, making significant progress and contributing significantly to the Gross Domestic Product and employment.
“Successive reversal of those policies by the past governments, unfortunately, helped reversed those positive developments, leading to the folding up of most of the auto plants and the many component manufacturers that supported those plants.
The intention of the NAIDP is to restore such glory for the sector, but poor implementation has now impaired its effectiveness,” Boyi said.
A professor of economics, Segun Ajibola, who is a former president of the Chartered Institute of Bankers of Nigeria described the situation as disturbing, especially at a time that government is relying on borrowing to finance the budget and pay workers’ salary.
He also expressed worries over government’s refusal to reduce the high cost of governance in the midst of fiscal challenges, saying, “there should be cheaper ways to take care of the transportation needs of lawmakers.
He added: “Why import? Can’t there be a way of domesticating this, rather than allowing another leakage from the economy? The economy at large is the ultimate loser because the gain of the exporter becomes Nigeria’s loss. This also speaks volumes about the quality of our industrial policy over the years. One expects that by now, a vibrant vehicle assembly plant capable of producing affordable SUVs to meet the needs of middle and highly-placed Nigerians would have been operating in the country.”
Ajibola said the nation’s political leaders need to walk the talk, stressing that service to the nation demands personal sacrifice, devoid of personal aggrandizement.
With the prevailing development, the former Chairman of Auto and Allied Sector Group of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Oseme Oigiagbe, said the nation’s leaders were not showing the desired, decisive move in ensuring that the country boasts of a robust local automotive industry, which would help it move from a comparative advantage to a competitive advantage.
Chairman, Autonation Nigeria Limited, Ugoh Nsofor, however, noted that there was nothing wrong in the move by the senators.
He insisted that while local plants must be encouraged, there was a need for the investors to up their game, especially by improving the quality of their vehicles.
“There are no functioning vehicles assembly plants in Nigeria, except Innoson and PAN. Any other person that says he or she is manufacturing must be lying. People are only bringing in parts and assembling with the government’s incentives. Government is not serious. Innoson should be patronised, but they need to upgrade their quality,” Nsofor said.
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