Monday, 5th June 2023

Auto policy suffers as NASS stakes N5.5b on SUVs

By Benjamin Alade
13 September 2019   |   2:52 am
The disclosure by the Welfare Committee of the Senate to embark on the purchase of SUVs is coming barely four years after some senators staked about N6.6 billion on imported brand new luxury vehicles.

Deplorable sate of Mushin road by Ojuwoye market in Lagos. PHOTO: AYODELE ADENIRAN

The plan by the National Assembly (NASS) to spend over N5.5 billion on imported Sports Utility Vehicle (SUV) has generated more concerns. BENJAMIN ALADE writes on its implications for the local vehicle industry and the state of auto policy.

The disclosure by the Welfare Committee of the Senate to embark on the purchase of SUVs is coming barely four years after some senators staked about N6.6 billion on imported brand new luxury vehicles.

The move, according to stakeholders is a breach of the Federal Government’s Executive Order Three, which mandated patronage of made in Nigeria goods and services, and 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.

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 Nigeria-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.

But the nation’s automobile industry has been reeling under the pangs of harsh operating environment, just as the bottom-line of the sector’s listed equities, since 2015, remained subdued, with gloomy outlook, due to policy challenges.Besides, stakeholders have continued to decry the National Assembly’s action on N5.55b earmarked on official vehicles. They said if the money is being invested in the sector, it will create jobs and make the country a force to reckon with.

They also want the Federal Government to hasten up procedures in signing the NAIDP bill to accelerate growth and boost investors’ confidence.Principal Partner, Media Advocate Limited, Manny Philipson, said was not laughable that a country that is grappling with the challenges of paying N30, 000 minimum wage sees nothing wrong in its National Assembly expending N5.550 billion on exotic vehicles for its principal members.

Philipson said the matter had become a recurring decimal so much that the eighth National Assembly expent N6.6 billion – while the senate spent N3.2 billion to procure exotic vehicles from 10 different contractors, the lower chamber spent N3 billion in 17 deals. This is in spite of agitations to encourage local vehicle manufacturing.

According to him, politicians prioritise self-interest and luxury than the welfare of the citizenry. “You would also recall that President Muhammadu Buhari’s inauguration car was a Mercedes Benz – Maybach S550 worth N280 million. What precedent is the executive setting for the legislative arm? Nigerians will be crying wolf if they think they can restrain or stop the National Assembly from procuring these choice vehicles. We must set our priorities right for us to address this matter subsequently.

“Sometimes I wonder why the previous vehicles used by the out gone legislature can’t be retrieved and refurbished for incoming principal members rather than spend fresh budgetary implications on common vehicles? I think it goes to show our level of ignorance and the value we attach to mundane things.”

Besides, he said these vehicles are supposed to be official and soon as the principal members of the Houses are done in office, the vehicles should be retrieved and handed over, afterwards they were paid salaries and allowances while in office.

“And should these cars be procured, they should be bought from the local vehicle assemblers and so far we have 10 subsisting vehicle assemblers including Peugeot Automobile Nigeria, Nissan Motors Nigeria, Honda Motors, Innoson Vehicle Manufacturing Company, CIG Motors Company Limited, Hyundai Motors Company, Ford Motors Company, JAC Motors Company, KIA Motors and Volkswagen AG,” he added. Dean, School of Transport, Lagos State University (LASU), Prof Samuel Odewumi, said there is no great demonstration of the fact that our political class does not have the ultimate interest of this country at heart than this instance.

“They preach to the poor to buy Nigeria and they cannot use this golden opportunity to show example. In this regard they are all united in their self interest.“There is no difference of opinion between PDP, APC or APGA. That should tell the poor that are fighting themselves over political affiliations to ‘borrow themselves brain’.

“Please, note that these people have been paid their Car Allowances. They are using the decoy of Committee chairmanship to still collect another official car. The committees are so many all of them will have a justification to collect per legislator.“We are in the political wilderness. I just hope one day we will get out of this selfish and wicked entrapment,” he added.

Chairman, Motor Vehicles and Miscellaneous Assembly Sectoral Group of the Manufacturers Association of Nigeria (MAN), Dr. David Obi, said it is unacceptable. Obi said if the money is being diverted into buying locally assembled vehicles, it will have great impact on job creation wealth creation and reduction in insecurity.

“If such money is being pumped into the sector, it will boost investors’ confidence and reduce the high rate of kidnapping in the country, because people who have been on the road kidnapping would have been engaged.” Deputy Managing Director of Massilia Motors, Kunle Jaiyesimi, said Nigeria is in a system whereby the lawmakers are the ones breaking the law. And it is like people are already giving up on issues here in the country. The non-passage of auto policy is a major hindrance for investors coming into the sector.

“From the presidency, the fancy cars that they use, we aren’t saying they shouldn’t use but they should think of the common people. Serious investors would make us a laughing stock if NASS invest such amount into buying exotic vehicles without investing in the NAIDP. “We started this in 2013/2014 and yet the Federal Government is yet to assent to it. Ghana that started theirs last year has passed the enabling law in January and they are making huge progress.

“I am happy that the president heard it in Japan last week that Toyota and Suzuki were starting their assembly operations in Ghana in 2020, and he was raising questions to Toyota asking them when they would come to Nigeria. “Maybe the question Toyota management should have asked him is that when are you signing your auto policy bill? It shows that the government is not too committed to the project Nigeria. That is why you see the senators spending that much now on new vehicles.

“If they commit this amount into vehicle procurement facilities for the masses, the government can also enjoy from the pool,” he added.Chief Executive Officer, Stallion Group, Anant Badjatya, said the local auto industry could create hundreds and thousands of jobs as it has done in many countries like South Africa, Egypt, India, to name a few emerging market economies. Not only job creation, a good and vibrant local auto industry is also a fantastic GDP growth enabler.

Badjatya, who decried NASS move, said patronage from government and related agencies is one of the biggest supports one can ask for.“It is not only about the N5.6 billion, but the kind of message it will give. If the National Assembly, state assemblies, all federal and state departments can tow the line; that is not only going to be a huge business but also generation of thousands of jobs in the idling assembly plants.

“These assembly plants can become viable and will in turn make more investments and generate more revenue for the govt. Badjatya said some of the Nigerian auto companies have developed world class auto assembly plants and they need to be patronised and promoted so that they become sustainable and play a leading role in the growth of the country.He said National Assembly ought to give a right message by giving a preferential treatment to companies doing local assembly.

“I honestly can’t think of any rational reason why they would not. We have every capability and the required models. It is incumbent upon people who represent us to do everything in their capability to imbibe and promote a culture that will augment growth, generate employment and protect investments.He said the implications of not promoting, supporting or patronizing local industry is grave and dare I say criminal waste of much needed money and resources at hand. “It is almost sinful for us to have few traders bring in fully built units (FBUs) or Completely Built Units (CBU) in the country and keep pushing for it for their own gains but at a great expense to the development of the industry and the nation. These traders do not create any jobs nor do any investments in the country.

“The likes of Nissan, Toyota, and VW are looking towards Ghana now even if less bright future than they hoped for. Interestingly Toyota in Nigeria never had to make any investments because policy and aspirations of people allowed it to make money without doing anything. Ghanian auto policy won’t allow that.

Speaking on the policy, Badjatya said the auto policy was an import-substitution industrialisation strategy to reduce importation of vehicles and incentivise domestic vehicle assembly. However, the auto policy implementation is nowhere near to getting affected, which creates an environment of uncertainty for OEMs and investors. He noted that the industry can play pivotal role in the drive for diversification, stating that patronage of locally assembled vehicles by the government and its agencies should be rigorously encouraged and enforced.

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