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LCCI Seeks Automotive Policy Review, Incentives For Local Automakers

The Lagos Chamber of Commerce and Industry (LCCI) has called on the government to consider immediate review of the nation’s Automotive Policy in view of its flaws that are not reflective of the current realities in the industry and attendant negative implications for the development of the local industry.

The organized private sector (OPS) group made its position known through a statement issued by its Director General, Mr. Muda Yusuf.

Specifically, the chamber faulted the policy in the light of its copious shortcomings and recommended that import tax [duty and levy] of 70 percent on new vehicles should be reduced to 35 percent while import tax [duty and levy] of 35 percent on commercial vehicles should be reviewed downwards to 25 percent and that duty and levy of used cars should be reviewed from current 35 percent to 25 percent.

In addition, the group also recommended that government should give further tax concessions to the assembly plants. SKD should all attract 5 percent duty while CKD should attract zero import duty to incentivize domestic vehicle assembly and retain other incentives for assembly plants and tyre industries for acquisition of machineries and equipment.

It also advocated the extension of similar incentives to local production of vehicle spare parts; patronage of locally assembled vehicles by governments and their agencies in line with the Presidential Order on made in Nigeria products; and that a Vehicle purchase finance facility at single digit should be put in place to boost demand for automobiles, amongst others.

The OPS group noted that the over 400 percent increase in the price of vehicles in the last six years demonstrated the failure of the policy, which was introduced as an import substitution industrialisation strategy to reduce importation of vehicles and incentivise locally made vehicles manufacturing companies.

Noting that import substitution strategy thrives in the context of high domestic value addition, Yusuf stated that it is within such a framework that the economy could benefit from the inherent values of import substitution, which includes backward integration, multiplier effects, conservation of foreign exchange, jobs creation and reduction of import bills.

He expatiated: “The review would be a relief to the private sector from the logistics perspective; more jobs will be restored in the automobile industry; smuggling will reduces and activities will snowball in the maritime sector.

“Car assembly plant will be better off with a five per cent duty on SKD; welfare effect on citizens will be positive; vehicle affordability by the middle class will improve; transportation sector will benefit and smuggling of vehicles will reduce drastically.

“The Nigerian Ports Authority (NPA), and ports’ terminal facilities will be more optimally utilised for better revenue performance; and customs revenue from vehicle imports will improve considerably”, the industrialist added

This is even as he pointed out that the six-year-old auto policy was not sustainable in its current form since its thrusts do not align with those of the Nigeria Industrial Revolution Plan (NIRP), which was the main industrial policy document of the current government.

According to him, while the NIRP espouses the strategy of resource-based industrialization, five years into the implementation of the auto policy has not recorded much progress.

For instance, the Director General noted that despite the fact that over 50 vehicle assembly plant licences had been issued during the period, the total annual sales of new cars in 2017 and 2018 were estimated at less than 10,000 units.

He maintained that the proposition of a review of the automotive policy fits very well into the Ease of Doing Business Policy of the government.


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