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Published On: Thu, Apr 17th, 2014

Nigeria’s Industrialization and new national automotive policy

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By Samuel Akpobome Orovwuje and Joel Akhator Odigie

The new policy initiative of the federal government on local manufacturing of cars looks well intended but the basic fundamentals were left out particularly on the proposed implementation of the new national policy on automotive. The celebration from and within government quarters and to many Nigerians, suggest that soon Nigeria will be manufacturing cars, made-in-Nigeria cars. The policy is a semblance of what should be in terms of effective contribution to moving the national economy and our industrialisation agenda forward. On the other, the policy, in terms of implementation will erode any real attempt at sustainable development and progress.

The policy in our views is clearly not the way to go in our development agenda. It defeats any real or imagined attempt to jump-start our industrialization process. The proposed policy should not be about the no-more-tokunbo-cars, but about local production and usage, and above all, consumption. Sadly, the policy also infers, by good measures, that projects such as the Ajaokuta Steel mills, meant to supply iron, a vital component for manufacturing, will almost never be re-visited. The government lacks the real vision to birth a made in Nigerian car.

Sadly, Nigeria makes so much motion without movement about its aspiration to be among the 20 leading economies in the world by 2020. A look at countries like China, Brazil, India and South Africa with real and passionate intentions to fundamentally define their industrialization is making serious efforts to undertake and deepen local production. Interestingly, China still sees itself as a developing and emerging economy and China is working at it!

The National Automotive policy without local content is also a mirage. All the Technology Incubation Centres meant to build capacity for industrialization have been abandoned and just conduits to siphon money from the public purse.

The question now is what is the government’s ambition about a made-in-Nigeria car? Besides, how many jobs will be created by a local car assembly plant with very low downstream activities (production) and same for the upstream activities (marketing) in the value chains?

The sure way to go in terms of demonstrating real intentions at industrialization and employment creation would have been that government move aggressively on the revival of the textile industry. You can only imagine the numbers of jobs our textile mills created across the country. In our views, this policy will only bring about an assembly plant car brands whose parts would not be made or fabricated in Nigeria. The sad reality of the policy is that it will grant Nissan and others all manners of tax concessions to the point of allowing them to engage, practically, in dumping.

For instance, the concession that allows Nissan and any other potential car assembly plant to bring in totally knocked down parts at 0% tax tariff is alarming and unthinkable. The other tariffs for the other parts that will be imported enjoy similar incredible knock-down rates. These so called tax incentives are monies that would have gone into financing government spending on social provisions as part of the fight against poverty and inequality.

On capital flight, profit repatriation, and technology transfer, the policy as proposed by Olusegun Aganga, the Minister of Trade and Investment lacks some logical reasoning. No doubt, this policy is another race-to-the-bottom policy desperate and mythical attempt to attract foreign investment. we find it difficult to dismiss that our public officials have done the usual by fronting for foreign businesses as partners and getting paid 10% whilst the country lose millions.

Besides, to increase car importation tariff by 70% of the value is anti-people, especially where credit and loan system is arbitrary, exorbitant and unbearable. In the global north, where cars are locally manufactured and sold, most cars are bought on credit. In Nigeria, interest rate on loans is about 21-29% with all manners of hidden charges. By and large, credit facilities are given to foreign businesses and governments, whilst the majority of the people in the informal economy literally have to pass through the eyes of the needle to secure loans from banks.

Furthermore, when you compare the scenario to over estimated 30% of unemployed youth, and then you can see that the policy in the long run is counterproductive. We can also see from the policy, how weak and non-committal the government can be when it comes to making and implementing local-content-driven policies such as the textile revival policy as well as the refineries.

It is absolutely unfair to call Nissan assembly plant as made-in-Nigeria cars! Nissan is a Japanese brand and it is never like Tata is that Indian. Of course, we are not against car assembling, but the way and manner this policy was formulated and being implemented is clearly not in the interest of Nigeria.

Indeed this policy is also a reflection of how much successive Nigerian government denigrate knowledge and skills sets. The efforts from the treacherous military era to the present political dispensation to build and improve human capacity are also not encouraging and infantile in our views. The recent Academic Staff Union of Universities (ASUU) strike is a pointer to how the Nigerian government scuffs knowledge and development. Indeed it is our view that there must be the clear and decisive political and leadership will to consciously invest in education, research and development. This way, the required skilled competencies to drive and sustain industrialization will be available.

Lastly, Nigeria like India must consciously invest in the automotive industry towards bringing a true Nigerian brand of vehicle and other allied products. The assembling of overseas automotive brands is a half measure, which in fact, makes mockery of our intention as a nation to move forward industrially.

Orovwuje is Founder, Humanitarian Care for Displaced Persons, Lagos and Odigie, is the Coordinator, Human and Trade Union Rights, Lome, Togo

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