Uncertainty trails Auto Policy bill

Two years after the National Assembly passed the Nigeria Auto Policy Bill designed to propel the growth of the automotive industry, there is uncertainty and confusion over what has become of the bill as the industry suffers, Daily Trust reports.

The National Automotive Industry Development Plan (NAIDP) Bill also known as the Automotive Policy was the brainchild of the National Automotive Design and Development Council (NADDC).


The bill serves as the legal framework developed to drive activities in the sector with the expectation that foreign investors would be much disposed to doing business in the industry assured of safety and return on investments.

Its passage by the National Assembly in November 2018 was received with delight by industry stakeholders, hoping it would revolutionize the sector and trigger a flurry of activities.

NADDC Director-General, Jelani Aliyu, has been excited about the bill. In 2017, he had said: “I am also glad to say that today, the National Auto Policy has been passed into law. This would put us in the perfect position to protect local investments and local companies such as FUSO in terms of tax haven, incentives that would support their production which would also protect them against unfair importation of competitive vehicles.”

However, a presidential assent is required to give full operational backing to the bill. It is the presidential imprimatur that has dragged on for two years fueling concerns over what has become of the bill which provides, among others, credit guarantees to automobile companies.

The National Assembly, it would be recalled, passed the bill in November last year and it was expected to be transmitted to the executive for presidential assent which would make it operational.

Stakeholders are in the dark over what has happened to the bill as the industry grapples with several challenges – drastic drop in sales of brand new cars; high price of brand new cars caused by naira devaluation; and non-performance of assembly plants among others.

Many dealerships in Nigeria currently groan over low sales while the ‘Tokunbo’ market has grown exponentially. According to stakeholders, brand new cars have gone beyond the reach of ordinary Nigerians and many people resort to patronizing fairly used vehicles popularly known as “Tokunbo”.

From selling 50,000 units of cars five years ago, the entire auto dealers reportedly sell less than 10,000 units annually as the sale of brand new cars dropped to an all-time low, it was learnt.

A recent report by Daily Trust indicated that no fewer than 50,000 units of brand new vehicles were sold in 2013. This dropped to 40,000 in 2015. In the following year, 2016, the figure crashed by 200 per cent to 20,000 units.

The figure plummeted further to 10,000 in 2017 and remained the same up till 2018. Analysts say 2019 is not looking bullish as the purchasing power of Nigerians shrinks in relation to buying brand new vehicles.

Also, the introduction of 70 per cent tariff on importation of new cars has jacked up the prices making a brand new car unaffordable to an average Nigerian.

Analysts fear the negative performance might remain the same without an auto policy driving investments in the sector.

One important aspect of the bill is the provision of car purchase scheme in partnership with commercial banks to enable average Nigerians purchase brand new cars at relatively cheaper prices and almost zero interest rate.

Aliyu, certainly, must have taken over in 2017 with the determination to drive the auto sector in Nigeria, bringing his American experiences to bear but it is believed that without the Auto Policy Bill being assented to, the industry would remain stagnant.

A former Director of Policy and Planning Department of NADDC, Luqman Mamood, said the non-passage of the automotive policy bill has slowed down activities in the sector and limited foreign direct investments.

He said OEMs are interested in “long term” investment and they need policy assurance which the bill provides.

“Most OEMs are therefore waiting in the wings for this legislation to commit their resources,” he said.

Mahmood, who acted as DG prior to the appointment of the present DG said, “We pursued its passage desperately such that by October 2017 when I exited, the bill had successfully passed the two chambers of the legislature. It was just waiting to be cleaned by the legal department before presentation to the president for consideration assent. But I learnt some overzealous officials derailed the process.”

Dr. Oscar Odibo, an industry player, said the industry would not make any progress in the next 10 years, 15 years without the auto policy, advising that whatever bottleneck was on the way should be removed for the industry to move forward.



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