Delay Of NAIDP Bill: $5bn investment, 100,000 jobs hang in the balance

• Automakers Hold Back From Nigeria
(Sundiata Post) – The delay in the passage of the National Automotive Industrial Development Plan (NAIDP) bill into law by the Senate, is said to be one of the factors holding back an estimated $5 billion worth of investment by automakers into the various local automobile assembly plants in Nigeria, under the 10-year (2013-2023) Auto Industry Development Plan.
Industry players estimate that the long term investment by the automakers is valued at $5 billion and will witness significant investment in fixed automotive kits, machinery, modern tools and technology, including component manufacturing.
It is expected that when the auto assemblies gain traction under the completely knocked down (CKD) stage of assembly, about 100,000 direct jobs and other spin-off businesses would be created, with an estimated production of over 10,000 units of vehicles annually.
The NAIDP bill passed through the House of Representatives and the Senate, during the last days of the administration of former President Goodluck Jonathan in 2015, but the bill did not get to his office before the then ruling People’s Democratic Party (PDP) lost power to current President Muhammadu Buhari’s All Progressives Congress (APC).
As at the time of filing this report, checks from the National Automotive Design and Development Council (NADDC) indicate that a total of 53 local auto assemblers have been granted assembly status, while operations are still at an all-time low.
Among local auto assemblers that have made investments into the country are PAN Nigeria Limited, VoN Automobiles, Coscharis Motors, Innoson Vehicle Manufacturers, Kia Motors, Toyota Nigeria Limited, Globe Motors, Lanre Shittu Motors, Weststar Associates and Nigerian Sino Trucks Limited, amongst others.
Jeff Nemeth, immediate past Managing Director/CEO, Ford Motor Company, South Africa, (FMCSA) told our reporter on the side-line of a Ford product launch in Johannesburg, that while the Automotive Policy of the Federal Government is a good development, it requires the right legislation to back it up.
For us, “No committed foreign automaker (OEMs) would make genuine commitment in any economy without a legal instrument that would guarantee its investment some element of legitimacy.
“What we need is for the Nigerian government to assure us of maximum protection by providing an enabling environment and ban the smuggling of vehicles and importation of used vehicles,’’ Nemeth stated.
Fielding questions from BusinessDay at the end of a facility tour of the Nissan assembly plant in Rosslyn, Pretoria, South Africa, Mike Whitfield, Managing Director of Nissan Motors, South Africa, described investment in auto manufacturing in Nigeria as what foreign investors have been yearning for because of the country’s huge population and GDP.
Whitfield stated that Nigeria can be like South Africa whose automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. Many of the major multinational firms use South Africa to source components and assemble vehicles for the local and international markets.
The sector is one of South Africa’s most important, contributing at least 6% to the country’s GDP and accounting for almost 12% of South Africa’s manufacturing exports, making it a critical mover in the economy. In 2010 a total of 271,000 vehicles were exported.
More than 28,000 people are directly employed in automotive manufacturing, with 65,000 employed in the component manufacturing industry. Another 200,000 are employed in retail and aftermarket activities, while about 6,600 are engaged into the tyre manufacturing industry.
Aliyu Jelani, Director-General of the National Automotive Design & Development Council (NADDC), had at a stakeholders meeting in Lagos, reiterated the commitment of government to playing a crucial role towards the economic diversification of the country.
Jelani said the move towards injecting vibrancy and achieving the needed volume of vehicles, requires the commitment of all stakeholders, in order to achieve the set goal of the National Automotive Industrial Development Plan, of locally assembling a sufficient number of vehicles to meet local demand and for export, as well as the development of cluster industries to manufacture automotive components parts.
Luqman Mamudu, Director of Policy & Planning, National Automotive Design & Development Council (NADDC) disclosed in a telephone interview with BusinessDay, that while the bill has been passed by the House of Representatives, it is yet to be passed by the Senate. The bill has only passed the first reading last June.
Mamudu stated that the NADDC appreciates the massive investments in infrastructure and equipment over the years, but regretted that local auto assembly operations are yet to gain the required traction, as most of the plants are operating under 10 percent of installed capacity.
According to him, “The Original Equipment Manufacturers (OEMs) want the bill passed as a precondition for investment in the country.
“They fear policy summersaults, which are considered commonplace in developing countries, including Nigeria and would want to see that their investments are legally protected and this is the only way to attract the much desired investment. Most of the investments you see on ground at the moment are by Nigerians’’, he concluded. (BusinessDay)

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