Henry Umoru
9 November 2009
The Director General, National Automotive Council (NAC), Engr. Aminu Jalal said at the weekend that the 2017 set mandate of getting out the first made in Nigeria car is not feasible, just as he disclosed that the Federal Government was considering the reversal of tariff for imported manufactured automobile components from 10 per cent to 40 percent.
According to him, rather than pursue the mandate of achieving the first made in Nigeria car, the Council has adopted a new approach of manufacturing car components by the country's local manufacturers that would meet the TIER one international automobile standards.
Addressing Journalists in Abuja weekend, the NAC boss disclosed that the council is operating a 2009 zero budget, stressed that arrangements have been concluded for the establishment of an automobile test centre where the Council will carry out test on cars and components coming into the country.
Jalal who spoke through the Deputy Director, Planning and Policy of the Council, Luqman Mamudu, explained that the reduction of tariff on automobile products from 40 to 10 per cent remains a major challenge to the survival of local industries in the sector against the backdrop that when pegged at 40 per cent, it would then be difficult and more expensive to import, thereby encouraging local manufacturing.
According to him, efforts were being made as part of its responsibility to convince government on the need to jack up tariff in order to encourage local manufacturers of automobile in the country.
"We have already made a presentation to government to take tariff for automobile back to 40 per cent so that it will make sense for those companies operating in the country to come back, 40 per cent was protective enough" he said.
The reduction of tariff to 10 per cent in the industry by government recently compelled major Tyre manufacturing companies like Dunlop and Michelin to close shop early this year.
Analysts have also said that the introduction of a protectionist policy comparable to that of Russia and other parts of the world by imposing higher tariffs on the importation of fully built up vehicles and automobile components was necessary to encourage local manufacturers.
These are standards which are comparable to components produced by great automobile firms in Europe and America such as General Motors and Chrysler.
Mamudu who noted that NAC was encouraging a strong alliance between companies in the countries with international component manufacturers all over the world, said there were presently about 54 component manufacturing firms in the country, adding that the strategy is among others, designed to encourage foreign investors who were interested in establishing car manufacturing plants.
Speaking further, he disclosed that the size of the National Automotive fund was N23 billion and deposited with the Central Bank of Nigeria (CBN) and accessed through the Bank of Industry (BoI) for loan at 10 percent interest rate for interested companies operating in the industry, just as there were plans to reduce the interest rate to 7%, adding that the fund has been disbursed to Peugeot Automobile of Nigeria(PAN) which got N3 billion, Dunlop N1.4 billion to build the truck Tyre, as well as Motorcycle Manufacturers.
The fund which is 2 percent levy charged on every imported automobile product in the country is a revolving loan established to encourage manufacturers in the industry which they pay back and NAC started collecting it since 1994, but it was stopped in April 2007.
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