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[INTERVIEW] What Nigeria should do to make automative sector investment climate attractive- Luqman Mamudu




LUQMAN MAMUDU is a former Director of Policy and Planning at the National Automotive Design and Development Council (NADDC) and Principal Partner at Transtech Industrial Consulting. Mamudu spoke to Harrison Edeh of the International Centre for Investigative Reporting (The ICIR) on the constraints dragging down the success of Nigeria’s automotive sector.

The ICIR: Can you assess​ the general implementation of the National Automotive Industry Development Plan today?​

MAMUDU: When I left service in 2017, the National Automotive Industry Development Plan (NAIDP), which is Nigeria’s automotive development program launched in October 2013, was well on course.  This period was more or less the first quarter of its ten years term. It had grown its installed capacity for assembly from a mere 89,000 to about 430,000 per annum.

However, the production capacity was constrained by factors that the programme had inbuilt mechanisms to address gradually. And efforts were in top gear to address them.

Unfortunately, these efforts have been discontinued, so the installed and operational capacity has shrunken considerably.

The ICIR: What are the key constraints so far, and how can they be addressed?​

MAMUDU: The most critical is monitoring and evaluation (M&E). M&E is key to steering a policy to fruition. It informs the action of the administrator and government to intervene correctly in the implementation process.

There was even no concrete mid-term review by 2018, when the program was five years old.

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There was even no concrete mid-term review by 2018, when the program was five years old. As a result of this, so many things happened. So it seemed, rightfully so, that the entire program was directionless, so those who hated the policy quickly mobilised against it.

The Nigeria customs service and the Ministry of Finance distorted the protective and concessionary tariff lines in favour of wholesale importation of all manner of vehicles.

Ordinary administration process of license renewal has been made almost impossible. Since then, the industry has been struggling because it’s practically impossible for an indigenous automotive industry to survive under these terms, especially in a borderless space at infancy.

Today, the streets of Nigeria are flooded with used vehicles.  The 5000 employed by the industry has dwindled to a trickle. Most of the plants are now importers. It’s easier to import because the tariff differential no longer justifies assembly, even at Completely Knocked Down,(CKD) level. I praise the few companies still so engaged.

The ICIR: Why is it difficult to produce components and parts locally for Nigeria’s automotive market? This huge market is  Presently dominated by second-hand imported parts?​

MAMUDU: Nigeria has an established track record for the production of components and parts. At a particular time, Peugeot Automobile of Nigeria (PAN) in Kaduna had over 180 local components and parts suppliers under its local content program.

But most have vanished because of inconsistent policies. The NAIDP addressed this by making provisions for Automotive Suppliers parks. This project has been abandoned.

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The ICIR: Where have​ we specifically derailed in the automotive policy implementation?​

MAMUDU: The policy administrators did not make sufficient effort to convince the presidency to give assent to the automotive investment confidence bill, which both chambers of assembly had passed.

The presidency asked for a simple clarification, and none was provided. Rather, for the past four years, all I’ve heard is that the policy is being reviewed. This certainly sent the wrong signal to the local and global investment community.

Inbuilt regular consultative meetings by stakeholders have been completely discontinued.

Secondly, the inbuilt regular consultative meetings by stakeholders have been completely discontinued.  This means that the program is denied collective effort essential in the implementation process.

The ICIR: You recently revealed the abandonment of the multi-billion naira land and imported equipment for auto-industry projects. Can you give more insights into this?

The automobile is regarded as a SAFETY item in the industry.  This means that any meaningful program must make provision for ‘homologation facilities’. The NAIDP, therefore, on its launch and until 2017, when I left, spent about N4billion on the acquisition of buildings and complementary safety test equipment in Lagos for an emissions test, Zaria for materials test and Enugu for components test. To the best of my knowledge, these projects are yet to be commissioned. You can find out.

Secondly, the underlying objective of NAIDP was to grow local content. Assembly was supposed to grow the numbers that will make foreign Components suppliers to locate near where an assembly is.

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So an automotive industry park designed to accommodate components manufacturers and even assemblers were provided for in the plan. As part of the implementation, about a 250-hectare plot was acquired near the Kaduna Airport in Kaduna, a 200-hectare plot in Oshogbo, Osun state, and 80 hectares plot provided free by the Anambra government in Nnewi.  To the best of my knowledge, these plots remain empty.

The ICIR: Where specifically did we get it wrong with the auto-policy, and what has it cost us so far?​

We failed to implement it rather, we are busy talking about reviewing a program for which the M&E report is unavailable

MAMUDU: We failed to implement it rather, we are busy talking about reviewing a program for which the M&E report is unavailable.  How is this possible? It has led to the loss of jobs in our plants and the export of jobs to foreign factories with consequent strain on our balance of payment position.  Some of the OEMs, especially under the aegis of the Association of African Automotive Manufacturers (AAAM), have shifted their manufacturing basis to other African countries. The AAAM particularly wanted to make Nigeria Africa’s automotive manufacturing hub.

The ICIR: Where did we get it wrong with the policy currently?​

MAMUDU: None implementation. Period!

The ICIR: How can we get back on track with the automotive policy to rejig our automotive market?​

MAMUDU: Section 38 of the 2020 Finance act should revert to the status quo.  That section made the tariff differential between an assembler and an importer meaningless.

Secondly, all levies collected so far on automotive imports should be channelled to an automotive purchase scheme for Nigerians to buy locally assembled automobiles at very low-interest rates.

This is provided for in the program to grow the market against imports. It was fully designed and ready for implementation. I don’t know what happened.

Nigeria customs should stay firm on its  Vehicle Identification Number(VIN) policy. I heard some licensed freight forward association querying the policy.

Nobody should listen to them. The policy will at least curb the importation of vehicles exhumed from scrap yards abroad.

Nigeria ought to grow its own second-hand vehicle market as done elsewhere.  It’s not proper to import used vehicles as a norm for any country keen on economic survival.

Ultimately, a cap should be put on second-hand vehicles import. Nigeria ought to grow its own second-hand vehicle market as done elsewhere.  It’s not proper to import used vehicles as a norm for any country keen on economic survival.

The ICIR: The government spoke about a possible review of the policy; how possibly can this be a win-win for the sector?

The industry should be properly surveyed before review.  I have not heard of any survey. All I hear is that this expert or that is reviewing.  This penchant for abandoning policies when not properly evaluated is reckless and should be discouraged. Nigeria is an obituary of policies. We should simply learn to implement, not quarrelling with tools.

Nigeria is an obituary of policies. We should simply learn to implement, not quarrelling with tools.

Can we look at countries whose auto-policy works and what makes the difference?

Examples of the countries is Ghana which copied our policy, Uganda, Rwanda, Morocco..and even Egypt.

Certainly, their fiscal and investment environment are better and stable. For instance, they discourage the importation of second-hand vehicles. Good tariffs differential between assembly and outright importation.

Author profile

Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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