Barring any last-minute hitch the Ghanaian auto market may soon be flooded with Nigeria-assembled vehicles.
Nigeria began the implementation of its auto policy which seeks to reduce car imports and set up a functional car manufacturing industry.
In October 2013, Nigeria's Federal Executive Council approved the new national auto policy in an attempt to cut down on the country's car import bill and encourage local manufacturing.
Just like most countries in Africa, Nigeria’s car manufacturing sector is one that is on its knees but with the new policy, Nigeria is expected to save an estimated US$3.451 billion in automobile imports and create more than 500,000 direct and indirect jobs.
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Figures from the Nigerian Automotive Manufacturers Association (NAMA), the Nigerian Bureau of Statistics (NBS) and the United Nations Conference on Trade and Development indicates that a total of 400,000 vehicles (300,000 used and 100,000 new), valued at N550 billion (US$3.451 billion), were imported in 2012 alone.
Additionally, Nigeria spends some N120 billion on annual tyre imports.
A thriving automotive industry in Nigeria is likely to boost the iron, steel, aluminium, plastic, rubber, glass, lead and the insurance industry in that country, and to some extent West Africa.
While critics maintain that the whole idea is a gamble that may end up increasing smuggling and cripple the car import market, the Nigerian government is optimistic the initiative will be successful.
President Goodluck E. Jonathan, who met a number of gurus in the auto industry on the sidelines of the World Economic Forum at Davos in Switzerland, maintained that his administration was fully committed to rapidly developing Nigeria’s auto industry through the diligent implementation of the country’s auto policy.
Speaking at a meeting with the Chief Executive Officer (CEO) of Nissan Motors, Mr Carlos Ghosn, and Mr Suni Vaswani, Chairman of the Stallion Group, President Jonathan said a key goal of the policy was to make new cars affordable for more Nigerians.
While demand for cars is on the increase in the West African sub-region, there is currently no competitive car manufacturing industry in the region, leaving room for a huge import market, especially for second-hand cars, which is outside the financial reach of many.
In that respect, President Jonathan said, “The only way to reduce the preponderance of second-hand cars on our roads is to produce good quality cars with affordable pricing locally.”
“The automotive industry in Nigeria has a huge potential for growth. The market is not just Nigeria, but the entire West African region,” he added.
Already, interest in the Nigerian auto industry is growing. Nissan for instance has partnered with regional automotive giants, Stallion Motors Group, to assemble some of its vehicles in Nigeria.
Nissan Motors plans to unveil the first made-in-Nigeria 4X4 SUVs in April this year using JV Stallion Group Automobile plant owned by its partners.
Stallion Motors has also entered into another strategic partnership with Hinduja Group. Stallion is already manufacturing Hinduja’s Ashol Leyland range of buses and trucks in Nigeria.
Nissan Motors boss
Mr Ghosn applauded the Nigerian government’s new automotive policy, saying it would encourage the inflow of investments and technical expertise to boost domestic vehicle production.
He observed that it was possible to produce two to three million cars in Nigeria annually with the consequent creation of thousands of direct and indirect jobs.
While the Nigerian auto project may be laudable, there are concerns about the ability of the country’s energy sector to support the industry. Nigeria has one of the most unreliable power supply challenges in West Africa.
To give some stability to the power sector, the Nigerian government recently approved $3.7 billion to improve power transmission across the country. This is expected to, among other things, cushion the sector against the extra pressure from the auto industry.
Will West Africa benefit?
Statistics from the Nigerian National Automotive Council (NAC) shows that the country has the capacity to produce 108,000 cars, 56,000 commercial vehicles, 10,000 tractors, 1,000,000 motor cycles and 1,000,000 bicycles annually.
Even though data on car imports throughout West Africa is hard to come by, more than a million vehicles are cleared in West African ports annually.
An increased production in Nigeria will mean a possible reduction in import bills from Korea, Japan, the United States, and United Kingdom – the main source of vehicle imports in West Africa.
A reduced import bill also means more people could afford newer cars. This would ultimately reduce the number of second-hand cars in West Africa.