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Aganga Explains New National Automotive Policy

Dr. Olusegun Aganga, Minister of Industry, Trade and Investment on Wednesday dilated on the new National Automotive Policy (NAP) endorsed by the Federal Executive Council (FEC) in Abuja to encourage local manufacturing of vehicles and enforce a gradual phasing out of imported used cars.

NAP projects the establishment of three automotive clusters to reduce the cost of investments and manufacturing of vehicles in six states namely, Ogun and Lagos, Kano and Kaduna as well as Enugu and Anambra.

In addition, NAP would encourage the revival of sectors such as petrochemical, metal/steel sectors and tyre manufacturing industries.

Moreover, the Industrial Training Fund (ITF) was collaborating with CENA, a vehicle manufacturer in Brazil to open automotive training centres in Nigeria while two Nigerian universities have been designated to commence degree programmes in auto-mechanical engineering to provide adequate local manpower.

With strict implementation of the policy, he projected, a brand new car locally produced would sell for less than N1.5 million and create a minimum of 700,000 direct jobs. Subsequently, the government would encourage banks to set up vehicle purchase schemes to enable Nigerians to buy cars on easy payment terms in instalment.

He recalled that a similar policy in the 1970s encouraged new Peugeot and Volkswagen cars produced locally to be affordable for average citizens. But it failed as a result of the lack of infrastructure, ineffective implementation, inappropriate tariffs, among others.

He gave the assurance that the government identified the pitfalls and would put in place measures that would guard against the inadequacies and encourage the success of the new policy. For instance, government would put in place appropriate tariff regimes to discourage car importation and encourage local manufacturing.

The country spent about N550 billion ($4.2bn) on car imports in 2010 and $3.4 billion in 2012. Thus, car import was almost head-to–head with machinery as the biggest consumer of the country’s foreign exchange.

NAP was formulated over the past nine months with input from the National Automotive Council (NAC) and foreign car manufacturers such as Toyota, Nissan and Honda. It would run as a 10–year plan and be reviewed after five years.

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