Impacts of Government Policies on the Nigerian automobile industry to date

10/09/2020

Posted by: Henry Egan

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Let's analyze the impacts of the Nigerian Government actions and policies on the nation's automobile industry and the challenges we are now facing.

Overview

Nigeria has become so dependent on other countries when it comes to Automobiles, surprisingly this was not the case in the past. When the industry first came up around 1950, private-owned companies were able to assemble vehicles locally with the aid of semi-knocked down parts.

In the early 1970s the federal government decided to walk into the automobile industry, they signed partnership deals with foreign companies, who would locally assemble vehicles. This move was fruitful, productive, and impactful to the industry.

Reports have it that the assembly plants erected by these companies were capable of producing 150000 units of vehicles.

The federal government was ready to put in more effort in making the industry a fast-growing one. In 1982, plans were drafted out for the government to partner with five other international companies.

Unfortunately, this plan never materialized; if it had, the nation would have had manufacturing plants in five different states of the federation, Isuzu plants in Maiduguri, Mitsubishi in Illorin, Mazda in Umuahia, Peugeot in Gusau, and Nissan in Minna. This article is going to analyze the impacts of the government actions and policies on the Nigerian automobile industry.

vehicle-assembly-plant

Can the nation's auto industry be revived?

>>> Check out These 62 registered automobile companies for assembling cars in Nigeria

Government decisions and policies that greatly affected the industry

The early 1990s saw a shocking and drastic decline in the nation's auto industry as the productivity of the local assembly plants dropped to about 20%. This change wasn't too surprising as the government turned all of its attention and focus to the oil sector. The excessive dependence on only one sector spelled doom for other areas of the economy. The neglect was a massive blow to the industry.

The government in 1994 came up with a policy, that made it mandatory for, "government at all levels and their agencies to source all their vehicles from within the country except such automobile was not available locally".

This bold step by the government was commendable, it ensured that all local auto companies would be duly patronized and protected, a step which is essential in creating a successful auto industry. Sadly this policy lacked all form of establishment and implementation, a policy which high officials of the government themselves disregarded.

As a result of the lack of growth and productivity, from 2001-2005, the federal government began selling the stakes it owned in the companies locally assembling vehicles.

Before 2013, virtually every automobile company operating locally was in private hands. Consequently, some of the rights and privileges these auto firms once enjoyed disappeared, resulting in the escalation of the systematic decline of the industry and the eventual folding up of some of these companies.

With a barely surviving auto industry, it was no surprise the importation of vehicles massively increased with fairly used vehicles accounting for most of the import. This high rate of importation (of used vehicles) coupled with the overwhelming decline of the economy has made it so difficult for locally assembled brand new cars to be purchased by Nigerians.

A survey conducted by Delloite shows that only 2% of the entire country is capable of affording brand new cars, a statistic that increases the cause for concern.

>>> Read this Cotonou VS Tokunbo cars: Which is better?

At the end of 2014, vehicles became the second-largest imported product in the country. This huge imports amounted to approximately US$7 billion worth of vehicles. This enormous amount sadly has been used in funding and growing the economy of other nations (countries which cars are being imported from) rather than being infused in ours.

car-dealership-in-lagos-island

At the moment, the country depends on imported used cars

In an attempt to address the severe decline facing the industry, in 2014, the government instituted the National Automotive Industry Development Plan (NAIDP). The government's sole aim of initiating this plan was to attract foreign investors and fight off the increased dependence of vehicle importation, thereby bolstering the local auto industry.

The NAIDP is loaded with lots of packages to attract the finest international investors. The plan involves increased industrial standards, local skills development, and industrial infrastructure.

The Nigerian government also created a parastatal, the Nigerian Automotive Council, one with the sole task of ensuring that the NAIDP achieves its purpose.

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Challenges

Just like every major battle, challenges, and obstacles are going to be present. Below are some of the highlights of the systematic issues that have impeded the progress of the nation's auto industry.

1. Declining economy

The general economy of the country has slowly changed from average to a poor one, this present status quo has affected all areas of the economy including the auto industry. Poverty and unemployment rate keeps increasing every year, making it more and more difficult for Nigerians to afford the locally assembled brand new vehicles. Thus, the fairly used ones shipped from other countries have become the desired and most feasible option.

2. Terrible nature of power supply

One of the basic priorities of all industries is the power supply and unfortunately Nigeria so far remains one of the worst countries in the area of power supply.

The regular and efficient power supply has contributed to the success story of many auto industries across the globe. Sadly, the auto companies in Nigeria are left without any option other than spending big on generators and other means to power up their plants. This increased cost of production has been a big challenge for these auto companies.

red-electric-car-charging

The epileptic power supply in the country is seriously impeding the growth of the Auto Industry

3. Defiant and reckless leadership

For several years, Nigeria as a country has found itself in the hands of many incompetent leaders, leaders who have failed to show interest in the future of its citizens, with successive leaders choosing to focus on the oil industry, making it easy to misuse and misappropriate funds.

>>> Check out the Top 7 most influential Nigerians in the auto industry

Conclusion

From the various research and reports carried out about the nation's auto industry, it is visible that the government are the ones who play the most important role.

The auto industry can only be resuscitated when the government effectively implement policies needed to protect it. Numerous economic and systematic problems also surround and make impacts on the Nigerian automobile industry, the more attention the government puts in solving them, the more electrifying the industry would be.

Before we leave, check out this video showing 100 made-in-Nigeria cars:

Video: 100 Nigeria Indigenous Made Vehicles

Naijauto.com brings you with the best knowledge about cars to help you do an expert yourself. Aside from the best car tips and advice, we provide a platform where car buyers and sellers come to get the quickest and easiest car deals. Check out our Cars for sale page now!

>>> More news is still been updated here on Naijauto.com! Click to see our Latest car news, Car prices, and Reviews!

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Henry Egan

Henry Egan

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Henry Egan a poet, essayist, content writer, blogger and technical writer who is willing to read just that last material to develop the best content possible. Henry feels he is more of a new generation writer with a sassy and swanky style. You can be sure you'll get all the facts in and never get bored with his articles.

He has got a flair for technical reviews on automobile and cars. He studied Mechanical Engineering but his first love remains Literary Art.

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