Tariff review: Nigeria faces closure of 54 Assembly plants, loss of 6,000 jobs – Auto manufacturers

The Nigerian Automotive Manufacturers Association has kicked against the Federal Executive Council’s approval of a tariff review on importation of vehicles into Nigeria.

NAMA, which made its displeasure with the policy known at a press briefing on Wednesday, accused the Comptroller-General of Customs, Hameed Ali, of working to ensure the closure of all assembly plants in Nigeria by flooding the country with ‘Tokunbo’ vehicles.

Demanding the immediate reversal of the policy, the manufacturers said the plants had already put in place a car financing scheme for Nigerians to own brand new vehicles at affordable rates.

The Chairman, PAN Nigeria Limited, Ahmed Wadada Aliyu; Chairman, NAMA, Tokunbo Aromolaran, and other stakeholders, were present at the media conference.

PAN Chairman, Aliyu, said the FEC gave approval for a review of tariff on imported vehicles based allegedly on the wrong statistics the Customs CG presented to the Minister of Finance on the automobile industry.

He said, aside from the fact that Nigeria would become a dumping ground for all manner of vehicles, there was an imminent closure of 54 assembly plants in Nigeria, with a total capacity of 417, 690 units per annum, and loss of 6, 000 jobs.

The manufacturers added that the tariff review would be more detrimental to the long-term competitiveness that the automotive industry must achieve if it must play any dominant role in Africa Continental Free Trade Area, AfCTA.

This, they stressed, would eventually lead to total collapse of the Nigerian Automotive industry, thereby positioning Ghana as the hub of automotive activities within the ECOWAS sub-region within a few years.

According to Aliyu, the reduction of tariff is a policy somersault that would not augur well for the industry and the country as a whole.

He also disclosed that many assembly plant operators were jittery as a result of the policy because they were exposed to over N100 billion to local banks.

Aliyu also warned that Nigeria would soon become a dumping ground for all kinds of vehicles that would lead to massive lay-off of employees in the industry, adding that this would further worsen the economic situation in the country.

The manufacturer’s representative said, “The Comptroller General has misled the Honourable Minister of Finance with wrong statistics about the automotive industry and subsequently got the Federal Executive Council’s approval for tariff review on the importation of vehicles.

“The action of the Comptroller General is a clear flagrant abuse of the direct access that he has to Mr President. We are appealing to Mr President to reverse this review immediately, because the effects include tokunbo importers flooding the country with all manner of old and obsolete vehicles.

“Nigeria will become a dumping ground for all manner of vehicles such as cars, buses, trucks, and others; Nigeria will not be able to compete in the AfCTA trade in the region; imminent closure of 54 assembly plants in Nigeria with a total capacity of 417, 690 units per annum and loss of 6, 000 jobs.”

He added that all the investments made over the years by local assembly plants in excess of over $1 billion were on the verge of going to waste, noting that all gains made by NAIDP in the past seven years would also be rolled back.

The manufacturers said when NAMA discovered that a tariff had been inserted in the 2020 Finance Bill, a meeting was called by the office of the Vice President.

The Chairman said, “It was agreed at that meeting that NAMA should put up a comprehensive presentation on the needs of the Automotive Manufacturers with regard to capacity for effective performance. We have been shocked to learn that the 2020 Finance Bill had been approved.

“The reasons adduced by the sponsors of this bill (Comptroller General of Customs) for this tariff review are listed as follows: Inadequate capacity of local automobile assemblers to meet demands of consumers, which is absolutely wrong because our combined capacity is over 500, 000 with over 4, 000 Number of employees in direct employment and about 2, 000 employed within the value chain, in addition to a combined total investment of over $1 billion.

“As a matter of fact, the problem of the automotive sector is not of production capacity but of excess capacity.”

On diversion of vehicles to other countries instead of the Nigerian market, he said, “The sponsors of this bill did not state that the logistics challenges that have always been witnessed at Nigerian ports has encouraged this diversion,” adding, “High transportation costs – rather than reduce duty on vehicle importation to reduce transport costs, the government should seek ways of providing mass transit schemes across the 36 States so that each State will be encouraged and supported with incentives to set up such schemes.

“Furthermore, the government should increase the demand for locally assembled mini and city buses by the launching of a low-cost vehicle asset acquisition fund under the control of the Nigeria Automotive Development Council, NADDC.

“With such a progressive move, haulage bus and truck owners will readily re-fleet to better serve the masses. The government should seek ways of reducing bureaucracy, eliminate bottlenecks and extortion at the ports.”

“We strongly believe that the Comptroller General succumbed to the bobby of ‘tokunboh’ dealers who are glorified car dealers with no matching investments in local vehicle assembly,” the manufacturers claimed.

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