A recent report by the United Nations Environmental Programme titled: USED VEHICLES AND THE ENVIRONMENT has ranked Nigeria as the highest importer of used cars in Africa, and third in the world behind the United Arab Emirates and Mexico.
The report shows that Nigeria imported a staggering 203,136 cars from the U.S. only, between 2015 and 2018. Also, it raises concerns about the impact of carbon emission on the environment, quality and safety of used vehicles; energy consumption; and the costs to operate used vehicles.
While these are real issues that need to be addressed, Nigeria’s failure to successfully implement its automotive policy is bewildering. The policy was designed to incentivize both local and foreign investors to setup automobile manufacturing businesses in the country, which would in turn create jobs for Nigerians and contribute to the country’s GDP.
In 2013, the Federal Government, under the leadership of former President, Goodluck Ebele Jonathan, unveiled a 10-year Nigerian Automotive Industry Development Plan, 7 years down the line, made in Nigeria vehicles are still a rare sight. While there have been some gains recorded in recent years with the entry of Innoson Vehicle Manufacturing Company and NORD Automobiles, the problems associated with the Nigerian manufacturing sector are holding the country back from accomplishing its full potential.
Nigeria’s failure to develop critical infrastructure over the years, coupled with corruption in government and the psyche of the citizens who would rather buy foreign-made products over locally made ones, are some of the major obstacles inhibiting the country from plugging the leakages in the economy.
Power is a key requirement for the manufacturing sector, businesses have shut down operations over the years and relocated to neighboring countries where power is more stable, and export the finished products to Nigeria. This economic hemorrhage has put a serious strain on the local currency as the demand for foreign currencies has shown no sign of slowing down. While the Federal Government has made huge investments in the power sector, the demand far outweighs the supply. Automobile manufacturing is capital intensive and the lack of steady power supply would make Nigeria an unattractive destination for such investment.
In addition, despite, the huge population that would have served as a ready market for made in Nigeria vehicles, the market is transferred to other countries. This has inadvertently created a habit of preference for used foreign cars over brand new locally made cars, thereby limiting the industry’s growth opportunity.
Some Asian countries have placed an outright ban on the importation of used cars to protect their automobile industries. While this measure may seem extreme for Nigeria at this time, the country should set and implement goals that will eliminate the importation of used cars to protect the local automobile industry, the local labour force and also, reduce the financial leakages arising from cars importation into the country.
While the government and private sector work together to create a viable automobile industry, the Federal Government should among other factors, ensure its borders are protected to keep smugglers at bay and also make certain that its customs service is dedicated to professional conduct that does not compromise on the control on the influx of used cars from foreign countries.