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Nigerians to get loans for locally-assembled cars

By BusinessNews Staff on July 5, 2014

From November, Nigerians will be able to purchase brand new cars assembled in the country without having to pay in full for them as the Federal Government’s vehicle acquisition finance scheme would have taken off then.

The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, made the announcement at a press conference in Lagos on Thursday.

According to the minister, the Federal Government is currently discussing with local and international financial institutions on how to make the scheme achieve the aim of making made in Nigeria cars affordable.

Though the details are still being worked out, our correspondent gathered that the government was encouraging the partner banks to make available loans for vehicle acquisition at not more than 10 per cent interest rate repayable over four years.

Aganga said, “The government is working on an affordable vehicle acquisition scheme, which will be launched in four months’ time. We are looking at an affordable interest rate of not more than 10 per cent against the current interest rate regime in the banks, which is over 20 per cent.

“We are currently engaging local and international financial institutions to provide the funds. People should be able to pay over four years at 10 per cent. We are still discussing; we have not yet finalised the details.”

However, the minister ruled out the option of the government providing the seed fund for the scheme, explaining that the banks would rather fund it, but that the government was working with them to reduce the interest rate payable on the vehicle acquisition loans.

The attraction for the banks, according to him, is that the scheme will represent a commercial opportunity for them, as many Nigerians will be able to buy brand new vehicles assembled in the country, with the multiplier effect of more citizens being employed by the assembly plants.

Aganga gave an assurance that the local vehicle manufacturers and assemblers had enough capacity to meet the expected upsurge in demand for new cars and would not increase the prices of their products.

According to him, the Nigerian Automotive Industry Development Policy will create thousands of direct and indirect employment opportunities by ensuring the revival of moribund vehicle assembly plants in the country and will raise the standard of living of the citizens.

The minister was joined at the briefing by the Executive Director, Nigerian Automotive Manufacturers Association, Mr. Arthur Madueke; Managing Director, PAN Nigeria Limited, Mr. Ibrahim Boyi; Managing Director, Leyland Nigeria; and Director-General, National Automotive Council, Mr. Aminu Jalal.

Aganga used the occasion to deny insinuation that the tariff on imported vehicles had been increased to 70 per cent, adding that importers of new and used vehicles, who had keyed into the new automotive policy, would only pay 35 per cent of the vehicles’ costs, while those outside the arrangement would pay an extra 35 per cent levy.

He said, “The rumour that the Federal Government has increased the tariff on imported cars to 70 per cent is incorrect and misleading. The Nigerian Automotive Manufacturers Association has already assured the government and all Nigerians that there is adequate stock of imported vehicles and that its members have not, and will not, increase the prices of imported vehicles.

“Nigeria is the only country in the world where used vehicles were not banned following the introduction of the new automotive policy. This is because President Goodluck Jonathan, before announcing the new policy, had taken into consideration the current socio-economic conditions of the average Nigerian and will not want to come up with any policy that will inflict more hardship on them.”

Aganga added, “The new automotive policy has been structured to encourage Original Equipment Manufacturers to invest in Nigeria to create jobs and develop our economy because we realise that for every car that we import into Nigeria, we are creating jobs for other countries.

“After consultations with all the stakeholders in the automobile industry, the government came up with different tariffs, which include zero per cent for Completely Knocked Down vehicles; five per cent for Semi Knocked Down 1 vehicles, and 10 per cent for Semi Knocked Down 2.”

[Punch]

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