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Bill to enable production of Nigerian cars, tyres passes second reading

By on September 20, 2014

A bill seeking to enable the production and assembly of cars and tyres in Nigeria as well as the provision of tariff incentives and income tax reliefs on all automobile and automotive components passed through second reading on the floor of the Senate yesterday.

Tagged: ‘Nigerian Automotive Industry Development Plan (Fiscal Incentives, Assurances and Guarantees) Bill’, the bill which is meant to strengthen the Nigerian automotive industry development plan, will among others, promote a sustainable and competitive automotive industry.

It is also meant to provide an enabling environment for the survival of existing assembly plants, revive the tyre industry, herald Nigeria’s industrial revolution plan using the automotive sector as a key component to diversify the economy and also generate revenues through industry and manufacturing.

Leading the debate on the bill, Senate Leader, Victor Ndoma-Egba, said automotive industry played strategic roles in the economic development of many countries especially in the area of job creation, enhancement of Gross Domestic Product (GDP), development of small, medium and micro-enterprises, innovation, skills and technology.

According to him, International Organisation of Motor Vehicle Manufacturers had reported that the auto industry directly employs over nine million people, representing five per cent of the world’s total employment in the area of manufacturing. He added that South Africa’s automotive industry for instance, contributed seven per cent of GDP and 12 per cent of exports to the country’s economy, disclosing that it is the second largest employer of labour in that country.

He recalled that Nigeria’s automotive industry comprising Peugeot Automobile of Nigeria (PAN), Volkswagen among others, in their hey days, produced no fewer than 150,000 automobiles at an estimated value of N450 billion and employment capacity of 20,000 adding that Nigeria had the local capacity to meet all needs relating to tyre production in the 1960s.

He regretted that the industry crashed in the mid-80s as a result of uncomplimentary government policies resulting in the collapse of capital utilisation in all assembly plants and consequently opened doors for importation of fairly-used vehicles.

Ndoma-Egba further recalled that vehicles worth whopping N600 billion, three-quarter of which he said were second-hand products, were imported into the country in 2012 only, lamenting that Nigeria’s tyre plants have run out of business, therefore, tyres estimated at the value of over N100 billion are being imported into the country every year.

He added that whereas the current operations of Nigeria’s automotive industry was limited only to assembly of commercial vehicles, the country at the moment, needs car assembly as well as production facilities that would enable it benefit from global potentials of automotive industry.

While some senators who contributed to the bill, noted that it would be difficult for local automobiles to compete with imported products especially in the face of the country’s epileptic power supply, others said it would improve and resuscitate steel industry as well as enhance the training of technologists and engineers which they said would have multiplier effects on other sectors of the economy.

In his remark, Senate President, David Mark, said whereas the bill was a good one, the realisation of the objectives would remain a tall order because power supply in the country has shown no sign of improvement.

“On paper, this is an excellent bill and there is absolutely no doubt about it, but what is more important is that it is not just this bill alone that will solve the problem of the automotive industry. Beyond this bill, practically on ground, we are not just prepared because no investor is going to put his money here if you cannot guarantee him constant power.

“If he is going to run on generator for 24 hours, he will never be able to compete in the international market. It is not a matter of producing rubber for Michelin, it is beyond that. DICON, which is in Kaduna today, was established the same time with the one in Brazil and India. Today, the equivalent in Brazil is building ships, aircraft, armoured cars, while DICON in Nigeria is producing furniture,” Mark lamented.

 

[This Day]