In October 2013, when the Federal Government under former President Goodluck Jonathan introduced a National Automotive Industry Development Plan (NAIDP) the objective was to stimulate investment in local vehicle production.
Then, part of the objectives of the auto policy was to bolster Nigeria’s economy with jobs and enhanced technology transfer with the setting up of assembly plants rather than spending so much on import of used and new automobiles from overseas, a process that had created millions of employment opportunity for such manufacturers at the expense of Nigerians.
However, after six years of policy implementation, the original targets and goals of the policy appear far from being realised. This because rather than achieving such goals, the policy had only fueled smuggling of vehicles through the land borders with neighbouring countries particularly Benin Republic.
To ensure that the policy achieved its set targets, the Jonathan auto policy had hiked the import duty on vehicles from 10 per cent to 35 per cent with an additional 35 per cent surcharge bringing it to a total 70 per cent. This percentage hike in duty in turn diverted Nigerian bound cargoes to neighbouring countries where importers pay less than 10 per cent before smuggling the vehicles into Nigeria. Those who could not go through smuggling terrains resorted to importing accidented and overaged vehicles where lower duty charges are paid to clear them.
Today for instance, virtually all the terminals located at the nation’s seaports are flooded with accidented and overaged vehicles.
It is indeed against this backdrop that members of the Organised Private Sector (OPS) and auto stakeholders have called on the Federal Government to review the six-year-old auto policy to further retool the nation’s industrial objectives.
Only recently the Comptroller-General of Customs, Col. Hameed Ali (rtd.), also advised the Federal Government to revisit the auto policy, especially the duty charged on used vehicles.
It was therefore not surprising when recently the Federal Government threw out the controversial National Automotive Industry Development Plan (NAIDP) known as auto policy as it prepares to introduce a new auto policy.
Although President Muhammadu Buhari may have dropped the auto policy bill passed by the 8th National Assembly by refusing to assent to the bill following negative feedbacks received from auto stakeholders and private sector operators, many believe its severe implication to the country’s economic growth and development when signed into law would be significant .
Daily Sun gathered that about N2.5 trillion may have been wasted on auto policy which the Federal Government finally confined to the dustbin of history.
Speaking at the Lagos Chamber of Commerce and Industry (LCCI) 2019 Presidential Policy Dialogue in Lagos recently, Minister of Industry, Trade and Investment, Adeniyi Adebayo, declared the six-year-old auto policy has failed to achieve the desired outcome for the country’s industrialisation bid in vehicle manufacturing and to impact positively on businesses of auto manufacturers.
According to him, that government was already planning to send a fresh auto policy bill to the National Assembly that would contain the inputs and views of auto stakeholders, private sector operators and interests of Nigerians in a bid to achieve inclusive industrialisation growth in vehicles manufacturing in Nigeria.
Speaking with newsmen, former member Presidential Taskforce on the Reform of Nigeria Customs Service; Presidential Committee on Destination Inspection and Ministerial Committee on Fiscal Policy and Import Clearance Procedure, Lucky Amiwero, said that the Federal Government needs to do while considering a new auto policy is to look for experts.
According to him, they need three types of experts, which are procedural, technical and administrative experts to look at the auto policy because that policy was not properly designed.
According to Amiwero, the 2013 auto policy lacked certain features of international policy and that policy was only in two aspects of concession, which are high tariff and the CKD.
He advised that the new auto policy must be comprehensively applied like what obtains in South Africa and various countries that are successful with their automotive policies
He added: What you have in Nigeria is just growing some few people who make money out of that policy. All those CKD, SKD, CKD 1 and 2 and all those things are not what will promote an auto policy in this age.These are old policy designs
What Federal Government needs now is concession and how things can be done properly. They need experts to look at it and to come out with a well designed policy.
Also commenting, the spokesman of the Seaport Terminal Operators Association of Nigeria (STOAN), Bolaji Akinola, commended the Federal Government for taking the bull by the horn to reverse the six years old auto policy.
He said the policy has been unpopular right from the first day it was introduced with many saying at the time that it will fail.
He explained: “It was like putting the cat before the horse. I will talk about what to do but before then, we must also emphasis the fact that, the policy has fueled smuggling. It was because of that policy that smuggling of used vehicles into Nigeria increased because what the past government did was to hike the tariffs on imported vehicles to about 70 per cent. And Nigerians cannot pay the 70 per cent due to low purchasing power.”
He hinted that then, importers land their vehicles in the port of Cotonou where they paid 10 per cent and then smuggled them into Nigeria which is the problem. He said that policy completely destroyed the auto sector in Nigeria. Going forward, he said what should government do in the new bill is to listen to the stakeholders, adding that government must consult widely the organised private sector because they are the ones that wear the shoes and know where it pinches.
He also said government should listen to port operators by consulting them very widely, input aggregated and the way forward are channeled.
But before that consultation even start, should immediately bring down the tariff on imported vehicles. It used to be 10 per cent import duty and 10 per cent surcharge making 20 per cent that is what it used to be before Jonathan’s administration increased it to 35 per import duty and 35 per cent surcharge making 70 per cent.