The Nigeria automotive industry has the potential for the diversification of the economy with value-driven supply chain and scalable.
The automotive industry in Nigeria is undergoing a transformation aimed at making the country an automotive hub in Africa. In 2019, over N360 billion investments was made into the Nigerian economy the automotive manufacturing companies.
Nigeria has the potential to become the hub of Africa’s automotive industry. Home to an estimated 200 million people, over 40 million of who are in the growing middle class, the continent’s largest economy is increasingly seen as an attractive destination for investors across all sectors.
After the comatose of the once vibrant Auto industry in Nigeria, the Government recognized the importance and basic role of the automotive industry in the industrial development of Nigeria by resuscitating the standing technical committee on national automotive industry in 1990.
The challenge
Local auto producers are burdened with a myriad of cost-raising problems, including unreliable power supplies, high bank interest rates and low labour productivity, local vehicle assemblers will struggle to survive if the market continues to be swamped with used vehicles.
Large-scale smuggling of used cars into Nigeria is probably the biggest obstacle to the growth of a sizeable market for new, locally assembled vehicles in the country, required for the motor industry to grow.
Government policy
The NAIDP, Nigeria’s national automotive policy envisioned under former president Goodluck Jonathan’s administration in 2014, plans to reinvigorate a once promising Nigerian automotive assembly industry. The Nigerian government introduced a policy in 2013 under its National Automotive Industry Development Plan (NAIDP) to aid the survival of local auto manufacturing in the country. In 2013, Nigeria’s automotive production capacity was around 100,000 vehicles but production peaked at 7,000 vehicles in 2015.
Nigeria plans to raise the portion of local manufacturing in the automotive industry to 80 percent by 2023 as Africa’s most populous country seeks to cut imports and diversify the economy from oil. The Nigerian automotive industry has the potential to create 70,000 skilled and semi-skilled jobs along with 210,000 indirect jobs in the Small and Medium-scale Enterprises if it operates at full scale.
Nigerian Automotive Industry Development Plan (NAIDP) 2014-2024 was designed to ensure growth and sustained development of the auto industry in Nigeria. The thrust of the national automotive policy was to ensure the survival, growth of the Nigerian automotive industry using local, human and material resources. The plan has five critical elements aimed at addressing various challenges facing the sectors and they include infrastructure development, investment promotion, standards, skills development and market expansion.
The patronage of the products of the Nigerian automotive industry by government and its agencies is necessary for the success of this programme. The Federal Government is already committed to patronize local products, as it has directed all MDAs to patronize indigenous auto assemblers in its vehicular procurement.
Following the auto policy, stakeholders have revitalized old plants and set up new facilities with innovative technologies in the production process of cars that are being introduced to the local market. The various auto and auto-related policies have and are being touted as the lifelines required to resuscitate the auto industry. Importations of automobiles and automotive components into Nigeria are valued about $8 billion in 2019.
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