Local Auto Companies Stifled by Tariff Discrepancy - Jalal

Mr. Aminu Jalal (m), DG, NAC addressing the media flanked by Dr. Smauel Otom (l), Minister of State for Industries, Trade and Investment and Mr. Toks Aromolaran (r), MD, VON Automobiles Nigeria Limited when Otom and Jalal recently visited the plant in Lagos

 

Recent figures from office of the Director, National Automotive Council (NAC) has said about N600bn is expended annually on importation of vehicles into the country.

Mr. Aminu Jalal, Director, NAC who gave this hint in Abuja said about 50,000 new and 150,000 used vehicles are imported into the country yearly.

He said “Nigerians spend an average of N400bn in importing passenger cars and by the time you add trucks and other vehicles, the amount rises to N600bn annually.”

This increase is prompted by the current policy structure that encourages importation and discourages local production, he said.

An assemblage of locally made AshokLeyland buses begging to be delivered to buyers at VON factory at Km 17 Lagos - Badagry Expressway Lagos

 

“The market is there but the constraint is the inauspicious import duty which makes imported vehicles to be cheap.

“This is why we are trying to reverse the trend to something obtainable in India and other countries where it is cheaper to set up manufacturing plant than importing vehicles,” Jalal said.

He said not until this is reversed the proposed launch of Made-in-Nigeria vehicle in 2017 may not be feasible.

The director-general said the plan to have a made in Nigeria vehicle was initiated when import duty was 30%.

Mr. Jalal flanked by Dr. Otom (r) and Mr. Aromolaran (l) inspecting one of the buses at the VON plant in Lagos

 

He described the current situation where the policy favours importation against production as unfavorable for investment, noting that to produce vehicles locally does not necessarily mean the vehicles had to be 100 percent made in Nigeria.

“The easiest way to encourage local production is by putting in place tariff structure that will discourage importation and encourage production of vehicles,” he said.

He said most countries all over the world always give their companies a lot of protection citing South Africa where import duty is very high to protect indigenous companies.

Also in India duty was as high as 300 % before it was reduced to 91%, Mr Jalal recalled.

As it is, only 10% duty is paid for commercial vehicles, 20% duty for cars and five percent duty for Completely Knock Down components. Several companies became moribund when government introduced this tariff structure in 2005, the director affirmed.

 

One of VON directors and the trio of Otom, Aromolaran and Jalal touring VON facilities during the visit