Students of the Ahmadu Bello University (ABU) in Zaria
at the weekend unveiled two cars that were constructed as an environment
friendly specially for this year’s ‘Shell Eco Marathon Competition’.
According to the Head of Mechanical Engineering Department, Dr. Mohammed Dauda, they started to manufacture the cars as Shell Petroleum Development Company of Nigeria Limited invited the ABU to participate in what they call ‘Shell Eco Marathon Competition’.
“The
car should be one that consumes little fuel but goes long distances.
This competition is held in America, Europe and Asia and we are
participating in the European one in Netherlands in May this year. All
materials used for this car were sourced locally,” Dr. Dauda said.
The locally-made cars named ABUCAR 1 and ABUCAR 2 were displayed on the university’s campus.
Dr.
Dauda, who doubles as the Dean, Faculty of Engineering, also said that,
though, there are things that they did not fabricate themselves,
everybody would be surprised that some of the components like the
electrical, they just looked at an old computer system and then adopted
some of the components that were useful. “So, this is one example of
what we did, which is recycling, otherwise, I will say 100 per cent of
the things we used were produced here in Zaria,” he added.
Last year, students from the University Of Lagos (UNILAG) as well as from the University of Benin (UNIBEN) have also built their own versions of energy-efficient car for the international Shell Eco-marathon. This marathon challenges student teams from around the world to design, build and test ultra-energy efficient vehicles.
Moreover, in October 2014, the University of Benin (UNIBEN) team won the international award in prestigious nomination “Most innovative vehicle design” for the car called ‘Ecocruise’.
READ MORE: http://www.naij.com/403800-made-in-nigeria-abu-students-create-eco-friendly-cars.html
According to the Head of Mechanical Engineering Department, Dr. Mohammed Dauda, they started to manufacture the cars as Shell Petroleum Development Company of Nigeria Limited invited the ABU to participate in what they call ‘Shell Eco Marathon Competition’.
Mechanical
Engineering department of Ahmadu Bello University (ABU) in Zaria have
manufactured an eco-friendly energy efficient car
The locally-made cars named ABUCAR 1 and ABUCAR 2 were displayed on the university’s campus.
An eco-friendly energy efficient car, ABUCAR
Last year, students from the University Of Lagos (UNILAG) as well as from the University of Benin (UNIBEN) have also built their own versions of energy-efficient car for the international Shell Eco-marathon. This marathon challenges student teams from around the world to design, build and test ultra-energy efficient vehicles.
UNILAG Car
Uniben students introduce Tuke-Tuke car
UNIBEN Team and Ecocruise
Over
the last few years the government of Goodluck Jonathan increasingly set
its sights on building up a domestic capacity to assemble, and
ultimately manufacture, cars.
The focus is partly driven by concerns over the impact of car imports on foreign exchange reserves but also by a desire to diversify and industrialize the economy, which relied heavily on oil revenues for the last three decades.
In the past, the country did manufactured cars through several international car manufacturers had partnerships with government and local factories in the 1970s with an annual output of about 108,000 cars. Nigeria’s nascent car industry subsequently withered away like an infested plant due to high production costs, limited innovation and a rise in imports as trade policies were liberalized and smuggling increased.
As part of its industrialization policy, the government announced the National Automotive Industry Development Plan (NAIDP) in October 2013, introducing tariffs on imports as a key instrument to make domestic production more competitive.
The ultimate aim of the policy is to create 70,000 skilled and semi-skilled jobs and create the conditions for Nigeria to eventually enter into car manufacturing.
The planned tariffs will entail a significant increase in duties and levies on fully built vehicles, from 22% to 70% for passenger cars and 10% to 35% for commercial vehicles. To boost local assembly, there is no levy on importing materials and parts for full assembly in-country and discounted levies of 5%-10% for partially assembled vehicles.
Tariffs are only one part of the equation, as many used cars are smuggled to Nigeria from neighboring countries. The government has stated that it will reduce smuggling through better controls on vehicles, car dealers and ports.
Though, the country has a history of announcing grand policies with little implementation, but in this instance, the tariff announcements have boosted international interest in establishing local assembly lines, with several major manufacturers already moving in.
Not everyone is pleased with this policy however. Nigerian car importers constitute an influential lobby and the push for more in-country manufacturing has come up against vested interests. There are also concerns that local capacity to build cars – constrained by poor infrastructure – is inadequate to meet demand and that this is pushing up prices significantly and creating yet more incentives for tokunbo smuggling.
Faced with public resistance and local capacity constraints, the implementation of the tariffs hike has been delayed on several occasions. A 35% duty on fully assembled vehicles came into effect in July 2014 and the additional 35% levy was only implemented on new vehicles in late 2014.
In February 2015, government announced that the full 70% tariff on tokunbo cars would be implemented in late June. The official reason was that domestic assembly couldn’t keep up, but the delay suggests wariness of introducing an unpopular tariff just before a closely fought presidential election.
The results of that election cast additional uncertainty on the viability of Nigeria’s automotive industry. President Jonathan lost his March reelection bid to opposition challenger Muhammadu Buhari, and the tariff regime is now at the mercy of the incoming Buhari administration, which takes office in late May.
Buhari’s All Progressive Congress (APC) has indicated that its shares the former government’s industrial objectives, but it does not have a particularly clear policy platform. Moreover, Vice-president-elect Yemi Osinbajo publicly questioned the wisdom of the current policy in February. Although Osinbajo said that the APC will “encourage local production of cars” he also added that “we will reduce the high tariffs that Nigerians are paying to import vehicles.” In the short term at least, international car manufacturers with expansion plans into Nigeria will face uncertainty over tariffs – and potentially the commercial viability of some local ventures.
Investors in the automotive industry in Nigeria will need to navigate a highly complex business environment, selecting the right local partners and interfacing with government agencies that have a reputation for difficulty and corruption. Making the wrong commercial or operational decision has the potential to lead to substantial damage to the investor’s reputation or balance sheet.
Moreover, infrastructure is uneven for instance the power supply is far from a given and the security environment for expatriates and local employees is at times challenging. Nonetheless, the prospective rewards in entering are also great with a potential new-car market of 1 million. It is this factor that will continue to attract international entrants to Nigeria over the next year.
Following the introduction of the automotive policy by the federal government, the
National Bureau of Statistics (NBS) revealed that motor vehicles & assembly sector grew by 26 per cent in 2014.
Prior to the introduction of the policy, industry data showed that the country’s annual spending on vehicle imports was estimated at $6 billion but the country recorded a drop of However, 20 per cent in the volume of imports since the first phase of the auto policy was introduced in July 2014.
The National Automotive Council (NAC) has since last year launched series of innovations including the national automotive repository portal while just last week, the council award N2.5 billon contract for the supply and installation of automotive testing laboratory equipment and tools worth €11.6m Euros (N2.5bn).
The Director General of NAC, Aminu Jalal, explained that the equipment and tools would be used in the gas emission testing laboratory in Lagos, component testing laboratory in Enugu as well as vehicle evaluation laboratory located in Zaria, Kaduna State.
Jalal said the laboratories are critical in the implementation of National Automotive Industrial Plan [NAIDP], as they are designated as centres of excellence in automotive engineering for learning and research.
He he believed that the laboratories will also open the way for vehicle components and parts manufacturing in Nigeria, adding that they will ensure that vehicles conform to safety and environmental regulations.
He further stated that the test centres are to test all safety components of vehicles such as brakes, windscreens, tyres, light, and seat-belts to ensure that vehicles conform to safety standards.
NAC DG underscored the need for legislation on safety and emission of vehicles in order to protect the occupants of vehicles in Nigeria.
As part of the benefits of the laboratories, Jalal hinted that it will develop local content as well as ensured that vehicles manufactured in Nigeria conformed to safety standards.
Lending his voice, the Chairman, Governing Board of NAC, Tunde Zedomi, told the contractors to strictly adhere to contractual agreements, warning that the management of NAC would not tolerate any breach.
Zedomi factored in some of the inhibitions to delivery of such projects, assuring the contractors supplying the equipment and tools to the testing that their money would be paid promptly in the course of their assignments.
The three companies that the contracts were awarded include Mustang Advanced Engineering, AVL Austria and Artec Testnology, Netherland.
Responding, one of the contractors, Gerolf Strohmeier, pledged on behalf of other contractors to work assiduously to deliver the equipment as well as conduct trainings for operators of the equipment within the specified nine months (36weeks).
Also, on the portal, NAC had set up as a database where vehicle identification numbers for locally assembled and imported vehicles in the country will be stored whilst it will facilitate the tracking and auditing of vehicle registration within measures to control dumping and smuggling.
To encourage local assembly of cars, the federal government announced plans to impose additional levy of 35 per cent on imported used vehicles (tokunbos), raising the total tariff to 70 per cent.
The date of implementation has been put back three times. It was originally set for July 2014, and has since been shifted to January, April and now July 2015.
The NAC had also recently developed a few projects including the Local Automotive Components Development Fund in conjunction with the Bank of Industry even as the N10bn fund has been disbursed to 27 companies.
Despite the recent growth, analysts at FBN Capital believe the sector faces multiple challenges, one of which is poor power supply.
“The actual energy generation figure nationally as at 03 May was 3,135 megawatts (MW), well below national demand of over 12,000MW. Towards the end of April the generation output was as low as 2,800MW, which the federal ministry of power attributed to gas pipeline vandalism.
“Despite potent challenges, the NAC still insists that the country is capable of rolling out 25, 000 locally manufactured vehicles by the end of this year. A few industry players argue that the country is not ready to embark upon developing a mature auto industry.
In our view, this is attainable in the long term. However, expanding the auto parts segment through the local content policy would hasten the process, “they said.
The analysts said the credit scheme vehicle also developed by NAC with WesBank is yet to kick-off due to a delay from the CBN on the approval of an operational licence.
Under the scheme, loans for locally-assembled vehicles would cost 10 -12 per cent, as opposed to 20 per cent and higher from the deposit money bank DMBs.
- See more at: http://www.vanguardngr.com/2015/05/fg-consolidates-domestic-capacity-for-made-in-nigerian-vehicles/#sthash.AbxpbHea.dpuf
The focus is partly driven by concerns over the impact of car imports on foreign exchange reserves but also by a desire to diversify and industrialize the economy, which relied heavily on oil revenues for the last three decades.
In the past, the country did manufactured cars through several international car manufacturers had partnerships with government and local factories in the 1970s with an annual output of about 108,000 cars. Nigeria’s nascent car industry subsequently withered away like an infested plant due to high production costs, limited innovation and a rise in imports as trade policies were liberalized and smuggling increased.
As part of its industrialization policy, the government announced the National Automotive Industry Development Plan (NAIDP) in October 2013, introducing tariffs on imports as a key instrument to make domestic production more competitive.
The ultimate aim of the policy is to create 70,000 skilled and semi-skilled jobs and create the conditions for Nigeria to eventually enter into car manufacturing.
The planned tariffs will entail a significant increase in duties and levies on fully built vehicles, from 22% to 70% for passenger cars and 10% to 35% for commercial vehicles. To boost local assembly, there is no levy on importing materials and parts for full assembly in-country and discounted levies of 5%-10% for partially assembled vehicles.
Tariffs are only one part of the equation, as many used cars are smuggled to Nigeria from neighboring countries. The government has stated that it will reduce smuggling through better controls on vehicles, car dealers and ports.
Though, the country has a history of announcing grand policies with little implementation, but in this instance, the tariff announcements have boosted international interest in establishing local assembly lines, with several major manufacturers already moving in.
Not everyone is pleased with this policy however. Nigerian car importers constitute an influential lobby and the push for more in-country manufacturing has come up against vested interests. There are also concerns that local capacity to build cars – constrained by poor infrastructure – is inadequate to meet demand and that this is pushing up prices significantly and creating yet more incentives for tokunbo smuggling.
Faced with public resistance and local capacity constraints, the implementation of the tariffs hike has been delayed on several occasions. A 35% duty on fully assembled vehicles came into effect in July 2014 and the additional 35% levy was only implemented on new vehicles in late 2014.
In February 2015, government announced that the full 70% tariff on tokunbo cars would be implemented in late June. The official reason was that domestic assembly couldn’t keep up, but the delay suggests wariness of introducing an unpopular tariff just before a closely fought presidential election.
The results of that election cast additional uncertainty on the viability of Nigeria’s automotive industry. President Jonathan lost his March reelection bid to opposition challenger Muhammadu Buhari, and the tariff regime is now at the mercy of the incoming Buhari administration, which takes office in late May.
Buhari’s All Progressive Congress (APC) has indicated that its shares the former government’s industrial objectives, but it does not have a particularly clear policy platform. Moreover, Vice-president-elect Yemi Osinbajo publicly questioned the wisdom of the current policy in February. Although Osinbajo said that the APC will “encourage local production of cars” he also added that “we will reduce the high tariffs that Nigerians are paying to import vehicles.” In the short term at least, international car manufacturers with expansion plans into Nigeria will face uncertainty over tariffs – and potentially the commercial viability of some local ventures.
Investors in the automotive industry in Nigeria will need to navigate a highly complex business environment, selecting the right local partners and interfacing with government agencies that have a reputation for difficulty and corruption. Making the wrong commercial or operational decision has the potential to lead to substantial damage to the investor’s reputation or balance sheet.
Moreover, infrastructure is uneven for instance the power supply is far from a given and the security environment for expatriates and local employees is at times challenging. Nonetheless, the prospective rewards in entering are also great with a potential new-car market of 1 million. It is this factor that will continue to attract international entrants to Nigeria over the next year.
Following the introduction of the automotive policy by the federal government, the
National Bureau of Statistics (NBS) revealed that motor vehicles & assembly sector grew by 26 per cent in 2014.
Prior to the introduction of the policy, industry data showed that the country’s annual spending on vehicle imports was estimated at $6 billion but the country recorded a drop of However, 20 per cent in the volume of imports since the first phase of the auto policy was introduced in July 2014.
The National Automotive Council (NAC) has since last year launched series of innovations including the national automotive repository portal while just last week, the council award N2.5 billon contract for the supply and installation of automotive testing laboratory equipment and tools worth €11.6m Euros (N2.5bn).
The Director General of NAC, Aminu Jalal, explained that the equipment and tools would be used in the gas emission testing laboratory in Lagos, component testing laboratory in Enugu as well as vehicle evaluation laboratory located in Zaria, Kaduna State.
Jalal said the laboratories are critical in the implementation of National Automotive Industrial Plan [NAIDP], as they are designated as centres of excellence in automotive engineering for learning and research.
He he believed that the laboratories will also open the way for vehicle components and parts manufacturing in Nigeria, adding that they will ensure that vehicles conform to safety and environmental regulations.
He further stated that the test centres are to test all safety components of vehicles such as brakes, windscreens, tyres, light, and seat-belts to ensure that vehicles conform to safety standards.
NAC DG underscored the need for legislation on safety and emission of vehicles in order to protect the occupants of vehicles in Nigeria.
As part of the benefits of the laboratories, Jalal hinted that it will develop local content as well as ensured that vehicles manufactured in Nigeria conformed to safety standards.
Lending his voice, the Chairman, Governing Board of NAC, Tunde Zedomi, told the contractors to strictly adhere to contractual agreements, warning that the management of NAC would not tolerate any breach.
Zedomi factored in some of the inhibitions to delivery of such projects, assuring the contractors supplying the equipment and tools to the testing that their money would be paid promptly in the course of their assignments.
The three companies that the contracts were awarded include Mustang Advanced Engineering, AVL Austria and Artec Testnology, Netherland.
Responding, one of the contractors, Gerolf Strohmeier, pledged on behalf of other contractors to work assiduously to deliver the equipment as well as conduct trainings for operators of the equipment within the specified nine months (36weeks).
Also, on the portal, NAC had set up as a database where vehicle identification numbers for locally assembled and imported vehicles in the country will be stored whilst it will facilitate the tracking and auditing of vehicle registration within measures to control dumping and smuggling.
To encourage local assembly of cars, the federal government announced plans to impose additional levy of 35 per cent on imported used vehicles (tokunbos), raising the total tariff to 70 per cent.
The date of implementation has been put back three times. It was originally set for July 2014, and has since been shifted to January, April and now July 2015.
The NAC had also recently developed a few projects including the Local Automotive Components Development Fund in conjunction with the Bank of Industry even as the N10bn fund has been disbursed to 27 companies.
Despite the recent growth, analysts at FBN Capital believe the sector faces multiple challenges, one of which is poor power supply.
“The actual energy generation figure nationally as at 03 May was 3,135 megawatts (MW), well below national demand of over 12,000MW. Towards the end of April the generation output was as low as 2,800MW, which the federal ministry of power attributed to gas pipeline vandalism.
“Despite potent challenges, the NAC still insists that the country is capable of rolling out 25, 000 locally manufactured vehicles by the end of this year. A few industry players argue that the country is not ready to embark upon developing a mature auto industry.
In our view, this is attainable in the long term. However, expanding the auto parts segment through the local content policy would hasten the process, “they said.
The analysts said the credit scheme vehicle also developed by NAC with WesBank is yet to kick-off due to a delay from the CBN on the approval of an operational licence.
Under the scheme, loans for locally-assembled vehicles would cost 10 -12 per cent, as opposed to 20 per cent and higher from the deposit money bank DMBs.
- See more at: http://www.vanguardngr.com/2015/05/fg-consolidates-domestic-capacity-for-made-in-nigerian-vehicles/#sthash.AbxpbHea.dpuf
Over
the last few years the government of Goodluck Jonathan increasingly set
its sights on building up a domestic capacity to assemble, and
ultimately manufacture, cars.
The focus is partly driven by concerns over the impact of car imports on foreign exchange reserves but also by a desire to diversify and industrialize the economy, which relied heavily on oil revenues for the last three decades.
In the past, the country did manufactured cars through several international car manufacturers had partnerships with government and local factories in the 1970s with an annual output of about 108,000 cars. Nigeria’s nascent car industry subsequently withered away like an infested plant due to high production costs, limited innovation and a rise in imports as trade policies were liberalized and smuggling increased.
As part of its industrialization policy, the government announced the National Automotive Industry Development Plan (NAIDP) in October 2013, introducing tariffs on imports as a key instrument to make domestic production more competitive.
The ultimate aim of the policy is to create 70,000 skilled and semi-skilled jobs and create the conditions for Nigeria to eventually enter into car manufacturing.
The planned tariffs will entail a significant increase in duties and levies on fully built vehicles, from 22% to 70% for passenger cars and 10% to 35% for commercial vehicles. To boost local assembly, there is no levy on importing materials and parts for full assembly in-country and discounted levies of 5%-10% for partially assembled vehicles.
Tariffs are only one part of the equation, as many used cars are smuggled to Nigeria from neighboring countries. The government has stated that it will reduce smuggling through better controls on vehicles, car dealers and ports.
Though, the country has a history of announcing grand policies with little implementation, but in this instance, the tariff announcements have boosted international interest in establishing local assembly lines, with several major manufacturers already moving in.
Not everyone is pleased with this policy however. Nigerian car importers constitute an influential lobby and the push for more in-country manufacturing has come up against vested interests. There are also concerns that local capacity to build cars – constrained by poor infrastructure – is inadequate to meet demand and that this is pushing up prices significantly and creating yet more incentives for tokunbo smuggling.
Faced with public resistance and local capacity constraints, the implementation of the tariffs hike has been delayed on several occasions. A 35% duty on fully assembled vehicles came into effect in July 2014 and the additional 35% levy was only implemented on new vehicles in late 2014.
In February 2015, government announced that the full 70% tariff on tokunbo cars would be implemented in late June. The official reason was that domestic assembly couldn’t keep up, but the delay suggests wariness of introducing an unpopular tariff just before a closely fought presidential election.
The results of that election cast additional uncertainty on the viability of Nigeria’s automotive industry. President Jonathan lost his March reelection bid to opposition challenger Muhammadu Buhari, and the tariff regime is now at the mercy of the incoming Buhari administration, which takes office in late May.
Buhari’s All Progressive Congress (APC) has indicated that its shares the former government’s industrial objectives, but it does not have a particularly clear policy platform. Moreover, Vice-president-elect Yemi Osinbajo publicly questioned the wisdom of the current policy in February. Although Osinbajo said that the APC will “encourage local production of cars” he also added that “we will reduce the high tariffs that Nigerians are paying to import vehicles.” In the short term at least, international car manufacturers with expansion plans into Nigeria will face uncertainty over tariffs – and potentially the commercial viability of some local ventures.
Investors in the automotive industry in Nigeria will need to navigate a highly complex business environment, selecting the right local partners and interfacing with government agencies that have a reputation for difficulty and corruption. Making the wrong commercial or operational decision has the potential to lead to substantial damage to the investor’s reputation or balance sheet.
Moreover, infrastructure is uneven for instance the power supply is far from a given and the security environment for expatriates and local employees is at times challenging. Nonetheless, the prospective rewards in entering are also great with a potential new-car market of 1 million. It is this factor that will continue to attract international entrants to Nigeria over the next year.
Following the introduction of the automotive policy by the federal government, the
National Bureau of Statistics (NBS) revealed that motor vehicles & assembly sector grew by 26 per cent in 2014.
Prior to the introduction of the policy, industry data showed that the country’s annual spending on vehicle imports was estimated at $6 billion but the country recorded a drop of However, 20 per cent in the volume of imports since the first phase of the auto policy was introduced in July 2014.
The National Automotive Council (NAC) has since last year launched series of innovations including the national automotive repository portal while just last week, the council award N2.5 billon contract for the supply and installation of automotive testing laboratory equipment and tools worth €11.6m Euros (N2.5bn).
The Director General of NAC, Aminu Jalal, explained that the equipment and tools would be used in the gas emission testing laboratory in Lagos, component testing laboratory in Enugu as well as vehicle evaluation laboratory located in Zaria, Kaduna State.
Jalal said the laboratories are critical in the implementation of National Automotive Industrial Plan [NAIDP], as they are designated as centres of excellence in automotive engineering for learning and research.
He he believed that the laboratories will also open the way for vehicle components and parts manufacturing in Nigeria, adding that they will ensure that vehicles conform to safety and environmental regulations.
He further stated that the test centres are to test all safety components of vehicles such as brakes, windscreens, tyres, light, and seat-belts to ensure that vehicles conform to safety standards.
NAC DG underscored the need for legislation on safety and emission of vehicles in order to protect the occupants of vehicles in Nigeria.
As part of the benefits of the laboratories, Jalal hinted that it will develop local content as well as ensured that vehicles manufactured in Nigeria conformed to safety standards.
Lending his voice, the Chairman, Governing Board of NAC, Tunde Zedomi, told the contractors to strictly adhere to contractual agreements, warning that the management of NAC would not tolerate any breach.
Zedomi factored in some of the inhibitions to delivery of such projects, assuring the contractors supplying the equipment and tools to the testing that their money would be paid promptly in the course of their assignments.
The three companies that the contracts were awarded include Mustang Advanced Engineering, AVL Austria and Artec Testnology, Netherland.
Responding, one of the contractors, Gerolf Strohmeier, pledged on behalf of other contractors to work assiduously to deliver the equipment as well as conduct trainings for operators of the equipment within the specified nine months (36weeks).
Also, on the portal, NAC had set up as a database where vehicle identification numbers for locally assembled and imported vehicles in the country will be stored whilst it will facilitate the tracking and auditing of vehicle registration within measures to control dumping and smuggling.
To encourage local assembly of cars, the federal government announced plans to impose additional levy of 35 per cent on imported used vehicles (tokunbos), raising the total tariff to 70 per cent.
The date of implementation has been put back three times. It was originally set for July 2014, and has since been shifted to January, April and now July 2015.
The NAC had also recently developed a few projects including the Local Automotive Components Development Fund in conjunction with the Bank of Industry even as the N10bn fund has been disbursed to 27 companies.
Despite the recent growth, analysts at FBN Capital believe the sector faces multiple challenges, one of which is poor power supply.
“The actual energy generation figure nationally as at 03 May was 3,135 megawatts (MW), well below national demand of over 12,000MW. Towards the end of April the generation output was as low as 2,800MW, which the federal ministry of power attributed to gas pipeline vandalism.
“Despite potent challenges, the NAC still insists that the country is capable of rolling out 25, 000 locally manufactured vehicles by the end of this year. A few industry players argue that the country is not ready to embark upon developing a mature auto industry.
In our view, this is attainable in the long term. However, expanding the auto parts segment through the local content policy would hasten the process, “they said.
The analysts said the credit scheme vehicle also developed by NAC with WesBank is yet to kick-off due to a delay from the CBN on the approval of an operational licence.
Under the scheme, loans for locally-assembled vehicles would cost 10 -12 per cent, as opposed to 20 per cent and higher from the deposit money bank DMBs.
- See more at: http://www.vanguardngr.com/2015/05/fg-consolidates-domestic-capacity-for-made-in-nigerian-vehicles/#sthash.AbxpbHea.dpuf
The focus is partly driven by concerns over the impact of car imports on foreign exchange reserves but also by a desire to diversify and industrialize the economy, which relied heavily on oil revenues for the last three decades.
In the past, the country did manufactured cars through several international car manufacturers had partnerships with government and local factories in the 1970s with an annual output of about 108,000 cars. Nigeria’s nascent car industry subsequently withered away like an infested plant due to high production costs, limited innovation and a rise in imports as trade policies were liberalized and smuggling increased.
As part of its industrialization policy, the government announced the National Automotive Industry Development Plan (NAIDP) in October 2013, introducing tariffs on imports as a key instrument to make domestic production more competitive.
The ultimate aim of the policy is to create 70,000 skilled and semi-skilled jobs and create the conditions for Nigeria to eventually enter into car manufacturing.
The planned tariffs will entail a significant increase in duties and levies on fully built vehicles, from 22% to 70% for passenger cars and 10% to 35% for commercial vehicles. To boost local assembly, there is no levy on importing materials and parts for full assembly in-country and discounted levies of 5%-10% for partially assembled vehicles.
Tariffs are only one part of the equation, as many used cars are smuggled to Nigeria from neighboring countries. The government has stated that it will reduce smuggling through better controls on vehicles, car dealers and ports.
Though, the country has a history of announcing grand policies with little implementation, but in this instance, the tariff announcements have boosted international interest in establishing local assembly lines, with several major manufacturers already moving in.
Not everyone is pleased with this policy however. Nigerian car importers constitute an influential lobby and the push for more in-country manufacturing has come up against vested interests. There are also concerns that local capacity to build cars – constrained by poor infrastructure – is inadequate to meet demand and that this is pushing up prices significantly and creating yet more incentives for tokunbo smuggling.
Faced with public resistance and local capacity constraints, the implementation of the tariffs hike has been delayed on several occasions. A 35% duty on fully assembled vehicles came into effect in July 2014 and the additional 35% levy was only implemented on new vehicles in late 2014.
In February 2015, government announced that the full 70% tariff on tokunbo cars would be implemented in late June. The official reason was that domestic assembly couldn’t keep up, but the delay suggests wariness of introducing an unpopular tariff just before a closely fought presidential election.
The results of that election cast additional uncertainty on the viability of Nigeria’s automotive industry. President Jonathan lost his March reelection bid to opposition challenger Muhammadu Buhari, and the tariff regime is now at the mercy of the incoming Buhari administration, which takes office in late May.
Buhari’s All Progressive Congress (APC) has indicated that its shares the former government’s industrial objectives, but it does not have a particularly clear policy platform. Moreover, Vice-president-elect Yemi Osinbajo publicly questioned the wisdom of the current policy in February. Although Osinbajo said that the APC will “encourage local production of cars” he also added that “we will reduce the high tariffs that Nigerians are paying to import vehicles.” In the short term at least, international car manufacturers with expansion plans into Nigeria will face uncertainty over tariffs – and potentially the commercial viability of some local ventures.
Investors in the automotive industry in Nigeria will need to navigate a highly complex business environment, selecting the right local partners and interfacing with government agencies that have a reputation for difficulty and corruption. Making the wrong commercial or operational decision has the potential to lead to substantial damage to the investor’s reputation or balance sheet.
Moreover, infrastructure is uneven for instance the power supply is far from a given and the security environment for expatriates and local employees is at times challenging. Nonetheless, the prospective rewards in entering are also great with a potential new-car market of 1 million. It is this factor that will continue to attract international entrants to Nigeria over the next year.
Following the introduction of the automotive policy by the federal government, the
National Bureau of Statistics (NBS) revealed that motor vehicles & assembly sector grew by 26 per cent in 2014.
Prior to the introduction of the policy, industry data showed that the country’s annual spending on vehicle imports was estimated at $6 billion but the country recorded a drop of However, 20 per cent in the volume of imports since the first phase of the auto policy was introduced in July 2014.
The National Automotive Council (NAC) has since last year launched series of innovations including the national automotive repository portal while just last week, the council award N2.5 billon contract for the supply and installation of automotive testing laboratory equipment and tools worth €11.6m Euros (N2.5bn).
The Director General of NAC, Aminu Jalal, explained that the equipment and tools would be used in the gas emission testing laboratory in Lagos, component testing laboratory in Enugu as well as vehicle evaluation laboratory located in Zaria, Kaduna State.
Jalal said the laboratories are critical in the implementation of National Automotive Industrial Plan [NAIDP], as they are designated as centres of excellence in automotive engineering for learning and research.
He he believed that the laboratories will also open the way for vehicle components and parts manufacturing in Nigeria, adding that they will ensure that vehicles conform to safety and environmental regulations.
He further stated that the test centres are to test all safety components of vehicles such as brakes, windscreens, tyres, light, and seat-belts to ensure that vehicles conform to safety standards.
NAC DG underscored the need for legislation on safety and emission of vehicles in order to protect the occupants of vehicles in Nigeria.
As part of the benefits of the laboratories, Jalal hinted that it will develop local content as well as ensured that vehicles manufactured in Nigeria conformed to safety standards.
Lending his voice, the Chairman, Governing Board of NAC, Tunde Zedomi, told the contractors to strictly adhere to contractual agreements, warning that the management of NAC would not tolerate any breach.
Zedomi factored in some of the inhibitions to delivery of such projects, assuring the contractors supplying the equipment and tools to the testing that their money would be paid promptly in the course of their assignments.
The three companies that the contracts were awarded include Mustang Advanced Engineering, AVL Austria and Artec Testnology, Netherland.
Responding, one of the contractors, Gerolf Strohmeier, pledged on behalf of other contractors to work assiduously to deliver the equipment as well as conduct trainings for operators of the equipment within the specified nine months (36weeks).
Also, on the portal, NAC had set up as a database where vehicle identification numbers for locally assembled and imported vehicles in the country will be stored whilst it will facilitate the tracking and auditing of vehicle registration within measures to control dumping and smuggling.
To encourage local assembly of cars, the federal government announced plans to impose additional levy of 35 per cent on imported used vehicles (tokunbos), raising the total tariff to 70 per cent.
The date of implementation has been put back three times. It was originally set for July 2014, and has since been shifted to January, April and now July 2015.
The NAC had also recently developed a few projects including the Local Automotive Components Development Fund in conjunction with the Bank of Industry even as the N10bn fund has been disbursed to 27 companies.
Despite the recent growth, analysts at FBN Capital believe the sector faces multiple challenges, one of which is poor power supply.
“The actual energy generation figure nationally as at 03 May was 3,135 megawatts (MW), well below national demand of over 12,000MW. Towards the end of April the generation output was as low as 2,800MW, which the federal ministry of power attributed to gas pipeline vandalism.
“Despite potent challenges, the NAC still insists that the country is capable of rolling out 25, 000 locally manufactured vehicles by the end of this year. A few industry players argue that the country is not ready to embark upon developing a mature auto industry.
In our view, this is attainable in the long term. However, expanding the auto parts segment through the local content policy would hasten the process, “they said.
The analysts said the credit scheme vehicle also developed by NAC with WesBank is yet to kick-off due to a delay from the CBN on the approval of an operational licence.
Under the scheme, loans for locally-assembled vehicles would cost 10 -12 per cent, as opposed to 20 per cent and higher from the deposit money bank DMBs.
- See more at: http://www.vanguardngr.com/2015/05/fg-consolidates-domestic-capacity-for-made-in-nigerian-vehicles/#sthash.AbxpbHea.dpuf
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