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Govt moves to revive auto industry with N550b

NIGERIA’S  moribund automobile sector may be on the way to a rebound as the Federal Government mobilises funds for the operators. The project, to be executed by the Central Bank of Nigeria (CBN) through the Bank of Industry (BoI), will cost about N550 billion. The money will be raised under a special intervention fund for the industry by the government.
The Guardian learnt at the weekend that the plan would be unveiled to the public within the next two weeks. This scheme, a CBN source told The Guardian, is targeted at encouraging Nigerians to patronise cars manufactured or assembled in Nigeria, adding that, the scheme will go a long way in encouraging such firms as Peugeot Automobile Nigeria (PAN) in Kaduna and the Nnewi (Anambra State)-based Innoson Automobile Manufacturing firm, among others.
He explained that if everything goes as planned and the policy is sustained between two to three years from now, fairly used vehicles would be phased out in the country as a brand new Nigeria manufactured vehicle can be bought at a maximum of N1 million.
To actualise this dream, The Guardian learnt that a bill that would give legal backing to the policy is already before the National Assembly.
The source revealed that the revival of the moribund Volkswagen of Nigeria is also on the card, adding that, a policy that will encourage local manufacturing of motorcycles is also being considered.
The scheme is divided into two parts, namely the supply side and the demand side. The supply side has to do with firms that are directly in the business of manufacturing automobiles or want to do so, while the demand side deals with incentives for individuals or organisations that may wish to purchase these automobiles.
He said when the policy comes on board, Nigerian organisations wishing to purchase vehicles for their workers are expected to shun foreign manufactured ones for those manufactured locally.
Both parties, he explained, can access the fund by applying through the National Automotive Council (NAC).
The NAC, he said, will forward these applications to the BOI for approval, while the funds will be disbursed through the commercial banks.
According to him, a previous idea, which was to use the micro-finance banks to disburse the funds due to their perceived closeness to the grassroots, was jettisoned when it was discovered that most of them lacked the capacity to handle such project.
On collaterals, he said the BoI would ask for collaterals from individuals or firms wishing to set-up vehicle manufacturing plants before the fund can be accessed, while individuals through their associations might not be required to produce any collateral before the fund can be accessed.
On the likely charges, he said loans of between two and five years would attract interest charge of 7.5 per cent from BOI, while for firms accessing the fund for working capital to establish a manufacturing plant will pay charges in the neighbourhood of 10 per cent, with payback period of about 20 years.
However, the charge for services by the disbursing commercial banks is yet to be spelt out, he said.
The terms of reference of the committee include to advise on policy formulation, competitiveness of products, better business models and tax relief matters, among others.
The committee is expected to make more findings, proffer resolutions and report back to the Vice President within two weeks, the statement added.
At the meeting, the management of PAN reportedly lamented the major challenge it said was threatening the company which was lack of funding and a steady market for its products, while it urged government to stimulate a demand for “Made in Nigeria”  cars by banning the importation of other cars into Nigeria.
Also present at the meeting was the Minister of State for Commerce and Industry, Josephine Tapgun, who, according to the release, pointed out that the challenges faced by PAN were similar to those faced by other others in the industry.
“ She called for a holistic look at most industries in Nigeria, especially those that have been privatised.
“This is to enable the forum proffer lasting solutions, which will also serve as a guideline for addressing the problems of other automobile industries such as British Leyland (Ibadan), Volkswagen (Lagos), ANAMCO (Enugu) and Steyr (Bauchi) in Nigeria.”

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Posted by on Feb 14 2011. Filed under Latest Politics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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