FRI 18 FEB, 2022-theGBJournal- The National Economic Council (NEC) has resolved to encourage the growth of the automotive industry in Nigeria by improving patronage of locally manufactured vehicles, just as the Council got assurances that the current fuel situation in parts of the country would be resolved by next week.
Both of these issues form part of the discussions at this month’s National Economic Council meeting chaired by Vice President Yemi Osinbajo, SAN, with Governors, Federal Ministers and top officials in attendance.
NEC is composed of all 36 State Governors, the Central Bank Governor and the Minister of the Federal Capital Territory alongside some other members of the Federal Executive Council.
Briefing NEC on the benefits of locally manufactured vehicles in the country, the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, said despite the potentials, the local automotive industry has been significantly plagued by several challenges such as weak demand for locally assembled cars, as well as lack of government patronage which could have assisted the assemblers in achieving economies of scale.
He noted that the Nigerian Automotive Industry has been identified as one with a catalytic effect on the economy, and to date, the industry has attracted US $1Billion in Foreign Direct Investments.
The Council was informed that there are currently over 30 active auto assemblers in Nigeria with 63 Licenses so far issued.
Despite the potential, the industry has been significantly plagued by several challenges such as weak demand for locally assembled vehicles due to lack of Government patronage to assist assemblers in achieving economies of scale; and Insufficient vehicle credit financing to stimulate private off-take.
The Ministry urged the State Governments to support the quest of driving Nigeria’s industrialization agenda and job creation aspiration.
The Minister also listed the benefits of the Automotive industry-
-Catalyst for driving mass production, local content and transfer of skills and knowledge:
-Potential to stimulate growth in other sectors such as asphalt, wood gasoline and road construction.
The impact of Government’s patronage was also highlighted. The Minister noted that that can enable Original Equipment Manufacturers (OEMs), achieve economies of scale and drive assembly capacity upwards, stimulate economic growth in other sectors such as road construction, prevent fledgling auto assembly companies and downsizing of staff, therefore mitigating capital flights and development of other countries.
Africa accounts for about 30% of the global Automotive Industry despite its strong demographic profile.
Significant growth is expected to be witnessed in the African vehicle market due to demographic trends, low current base and AFCFTA impact
State Governments can utilize Locally Assembled Vehicles in addressing some of the challenges facing the Public Transportation System.
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