Segun Aganga Attacked For Helping Indian Car Manufacturers

Olusegun Aganga. His body language seems to say ‘bury the indigenous auto makers in Nigeria.’ First, as Minister of Trade and Investment, he granted a waiver (allegedly) to an Indian firm to import over 200,000 (two hundred thousand) fully built-up Volkswagen Sport Utility Vehicles (SUVs) in the country. He denied the report as an allegation in a national newspaper (Not BusinessDay). The Director General of NAC, Aminu Jalal admitted, according to a newspaper report, that he was aware that the waiver was a proposal put forward by an auto import company as a precondition for them to open a vehicle producing plant in the country. Jalal was quoted as saying that the Minister of Trade and Investment sent the request to them to look at and comment. “We met with the company and told them that the incentives they are clamouring for are good and are the same that we have been advocating in the past, like increase in tariffs for FBUs but we objected to their request of duty-free importation.” Second, he has happily announced that another Indian group have submitted proposal to establish auto assembly plants in Nigeria. All that news sends mixed and unsettling signals to the already existing indigenous auto makers struggling amidst some strange policies that have hindered their progress thus far. It says to them that his priority is to strengthen the competitive advantage of emerging market auto makers, like India and China, which they already have, to the detriment of Nigeria auto makers like Innoson, Peugeot Automobile and National Truck Manfacturers (NTM). Wrong strategy. Nigeria should at this period be trying to put in place policies that will encourage and position the automotive sector by stimulating the existing cadre of privately-owned manufacturers to help re- energise the economy. The ministry of trade and investment should be doing more to look towards even India and China and follow their approach with commitment to making manufacturing a more central part of the economy. One way to do this is to refocus the banking system to create a pool of fund among themselves to provide finance for local auto manufacturers. There are four or five banks and few other financial institutions that can be co-opted to lend to even the ancillary manufacturers to help them build up capacity and even sales over a long time. While Innoson is the biggest indigenous auto maker in the country, research by BusinessDay has shown that in the past two years they have struggled to sell up to 1000 unit of their bus, which compares in terms of quality with those imported by foreign auto traders in the country despite their financial commitments. Again, PAN has continued to suffer from myriad of issues, ranging from sales to financing challenges while these foreign groups enjoy massive waivers and subsidy provided by the federal government. PAN is currently producing less than 20 cars daily and on the verge of retrenching about 5000 workers from their plants. Their woe is re-enforced by lack of government patronage and the huge cost of doing business in Nigeria. Its entire production line is decaying and under-utilised. The likes of Anambra Motor Manufacturing Company (ANAMMCO), once jointly owned by the Nigerian Government and the Mercedes Benz of Germany, South Eastern states, and some Nigerians and Volkswagen of Nigeria has since closed shop. No doubt, auto manufacturing is key in any effort to rebalance the economy away from a dependence on oil. Its importance in terms of job creation can not be over-emphasized. Supporting its sustainability therefore should not be a question of lip-service but a concrete effort towards re-assuring stakeholders that any further allusion to foreign competitor or the encouragement of fully fitted vehicles into the country does not mean a death knoll for local manufacturers.