The National Automotive Design and Development Council (NADDC) have said that it has started reviewing the country’s automotive policy with the stakeholders in the auto industry in other to eliminate the hindrances currently bedevilling the sector.
Director, Policy and Planning of NADDC, Mr. Luqman Mamuda, who disclosed this in a telephone conversation with Business247 News Online in Lagos, noted that when the policy was made in 2014, many companies welcomed it because of the tariff differentials between the Completely Knocked down (CKD), Semi Knocked down (SKD), and fully built vehicles.
He stated, fully built vehicles attract higher levies and duties. The policy made it clear that zero percent duty is charged on CKD and 10 percent for SKD and for commercial vehicles for 10 percent instead of 35 percent, but for the completely built vehicles, revenue of 35 percent and duty of 35percent, hence, making it a total of 70 percent charges on the import of fully built vehicles.
“We have to encourage these Original Equipment Manufacturers (OEMs) to come with their capacity. If we create the right environment for them, they will come with their capacity to produce here and if this happens, we can export from here to earn foreign exchange. We are calling on the OEMs to use Nigeria as a hub for the whole West Africa, but we must be ready and focus so that we do not lose the opportunity.”
“The policy was sufficient for Nigerian investors and it meant well for the OEMs abroad, with this, most of the auto assembling plants in the country started retooling to produce but a lot of bureaucracies somewhere along the line and administrative hiccup and customs administration set in, which made it difficult for them to have a sufficient turn around in terms of number of vehicles assembled.”
He pointed out that Nigeria currently has the capacity to assemble 384,000 vehicles per annum, but only 25,000 vehicles was assembled by April 2016, stressing that the reason was purely administrative hiccup.
According to him, “The issue of forex has set in and most of them are not able to generate forex for procurement of their CKD and their required SKD, especially those that are 100 percent funded by the local entrepreneurs. This affected the local entrepreneurs but most of the OEMs that invested on their own still have the money to bring in the Knock down vehicle, but because of the procedures, a lot of them prefer that the status-quo remains.
“So for this reason, the government directed that we deliberate with all the parties involved to remove these limitations. That is why we have embarked on review of the exercise which is focusing especially on the customs excise, focusing on how to bring credit facilities, which will help Nigerians to afford vehicles in piece meal bases.
“Before 2014, the country’s capacity was only assembling less than 2000 vehicles but in 2015, we were able to assemble over 20,000 and in this year, no doubt, there is an upsurge in the volume produced because the more Original Equipment Manufacturers (OEMs) have already indicated interest in investing in the country.
“Right now, a Chinese firm is building a plant in Abia State, which will essentially focus on commercial vehicle, such as light vehicles that can be used to get produce from the farms to the markets. Heavy duty vehicle for haulage would also be manufactured by this company which will enhance the already existing capacity.”
He added that Youtong has recently signed an agreement with Anambra Auto Manufacturing Company (ANAMCO), Enugu, to start manufacturing their buses and trucks in Nigeria, maintaining that it will not only boost the production capacity but will also help in diversifying and repositioning the economy.