The New National Automotive Policy and Nigeria’s Industrialization

AgangaBy Joel Akhator Odigie
The new policy initiative of the federal government on local manufacturing of cars looks well intended but the basic fundamentals were left out particularly on the proposed implementation of the new national policy on automotives. The celebration from and within government quarters and to Nigerians suggest that “soon, Nigeria will be manufacturing cars, made-in-Nigeria cars for that matter. At best, the policy is a semblance of what should be in terms of effective contribution to moving the national economy and our industrialisation agenda forward. At worst, the policy, in terms of implementation will erode any real attempt to grow locally. I have tried to simplify, but not trivialize some of my reactions to the policy here.
The policy in my view is clearly not the way to go in our development agenda. It defeats any real or imagined attempt to re-start our industrialization effort. It should not be about the no-more-tokunbo-cars, but about local production and usage, writ, consumption of affordable new cars.
Furthermore, the policy also infers, by good measures, that projects such as the Ajaokuta Steel mills, meant to supply iron and still, vital components for manufacturing, will almost never be re-visited. Look at developing countries like China, Brazil, India and South Africa with real intentions to fundamentally define their industrialization aspirations are making serious efforts to undertake and deepen local production through aggressive policies and support programs. Yes, in case you are wondering about China, it still sees itself as a developing and emerging economy and working at it! On the contrary, Nigeria makes so much motion without movement about aspiration to be among the 20 leading economies in the world in some magical year, 2020.
The National Automotive policy without local content is also a mirage. Virtually all the Technology Incubation Centres meant to build capacity for industrialization have been abandoned and just conduits to siphon money from the public treasury. This government lacks the real vision to birth a made in Nigerian car
The question now is what is the government’s ambition about a made-in-Nigeria car? Besides, how many jobs will be created by a local car assembly plant with very low downstream activities (production), ditto for upstream activities (marketing) in the value chains?

Imagine that this policy will only bring about an assembly plant car brands whose parts are never made or fabricated in Nigeria. The sad reality of the policy is that it will grant Nissan and other interested car manufacturing brands all manners of tax concessions to the point of allowing them to engage, practically, in goods dumping.
For instance, the concession that allows Nissan and any other potential car assembly plant to bring in totally knocked down parts at 0% tax tariff is alarming. The other tariffs for the other parts that will be imported enjoy similar incredible knock-down rates.
These so called tax incentives are monies that would have gone into financing government spending on social provisions as part of the fight against poverty and inequality. Furthermore, studies have shown that businesses do not want incentives, but infrastructures. In essence, responsible companies are ready and willing, prefer functional infrastructures (electricity, durable roads, security, portable water, human capacity) rather than be given incentives and left to be a municipal.

Linked to the issue of incentives and tax concessions that this policy is willfully giving away is that there is the feeling that [foreign] capital is compassionate. It must be clear that capital (money) is a coward. It will never go anywhere it is not safe. Equally, too, policy to attract foreign capitals to complement local ones should never be conceived from the perspective that such monies coming to benefit us, the recipient economy. Rather, such capitals come because they are sure they will make profit and not a charity. When the environment for profit extraction becomes less conducive, such capitals will run away!
On capital movement, profit repatriation, and technology transfer, the policy as proposed by Olusegun Aganga, the Minister of Trade lacks some logical reasoning. No doubt, this policy is another race-to-the-bottom policy (desperate, mythical) attempt to attract foreign investors. Though not one given to fancy conspiracy theories, however, I find it hard to dismiss the feeling in my head that our public officials have done the “usual” (posing as fronts for foreign businesses) and getting paid in peanuts whilst the country lose millions and they are not perturbed.

It is dishonest to call Nissan assembly plant manufacturing as made-in-Nigeria cars! I mean what cheap stunt and near scandal can it get. Nissan is a Japanese brand and never like Tata is that Indian. Of course, one is not against car assembling, but the way and manner this policy was formulated and being implemented is clearly not in the interest of Nigeria and Nigerians.
Similarly, to increase car importation tariff by 70% of the value is anti-poor, especially where bank credit/loan system in Nigeria is arbitrary, exorbitant and unbearable. In societies where cars are locally manufactured and sold, most cars are bought on credit facilities with bearable and flexible repayment arrangements.
In Nigeria, interest rates on loans hover around 21-29% beside hidden charges. Besides, credit facilities are given mostly to big businesses, formal employees and governments, whilst the majority of the people in the informal economy literally have to pass through the eyes of the needle to secure loans from banks. And when you compare the scenario to the situation of the over 30% of the armies of the unemployed (and more than 50% under-employment) in Nigeria, then you can better comprehend that this is an anti-poor, pro-rich/elite policy. At best the present middle class and governments at the various tiers will be the clients of these car assembly plants. In essence, one can say that the policy puts the cart in front of the horse.
Furthermore, one can also see from the policy, how weak and non-committal government can be when it comes to making and implementing local-content-driven policies such as the textile revival policy as well as the refineries re-start initiative. To think that the value chains benefits from these two local operations and largely, ownership are immense and direct.

The sure way to go, I mean in terms of demonstrating real intentions at industrialisation and employment creation, would have been that government move aggressively on the revival of the textile industry. You can only imagine the numbers of jobs our textile mills created across the country, especially the Northern part of the country in their active days. I dare say, it would have made positive impact in preventing the security challenges from that region since most of the hands now, possibly, recruited would be busy in the factories. The gains from value addition from the textile sector are handy and immense.

Yes, this policy is also a reflection of how much successive Nigerian governments denigrate knowledge and skills. The efforts from the military era to the present dispensation to build and improve human capacity are so lame, non-genuine and infantile. The recent (like previous) Academic Staff Union of Universities (ASUU) strike is a pointer to how the Nigerian government scuffs knowledge. There must be the clear and decisive political will to consciously invest in education, research and development. This way, the skilled man-power to drive and sustain industrialization will be available. Killing public schools to promote quick-bake private education products harms and continues to harm the poor and the country.
To think that all the past and present political players and captains of industries are more than 95% from public schools shows how ungrateful the elites have been to the country and future generations. I’m not deluded that the ruling elite will change “just like that”, they must be critically engaged to initiate a new pro-poor process that can drive progress and development.
Nigeria like India must consciously invest in the automotive industry towards bringing a Nigerian brand of vehicle and other products. It is the only way for the industry to have an impact economically. Limiting it only to assembling of overseas brands is a half measures, which in fact, makes mockery of our intention as a nation to move forward industrially.

Odigie, is the Coordinator, Human and Trade Union Rights at Africa Regional Organisation of the International Trade Union Confederation (ITUC- Africa), Lome, Togo.

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