Business

Nigeria’s auto industry shrinks by 37.5 %, unpaid loans at 53.8%

Published

7 years ago

November 17, 2016

The current economic recession has hit hard on the auto industry reducing its market share from 400,000 vehicles in 2015 to 250,000 in 2016, suffering 37.5 loss within the period.

Players in the industry said though there was a noticeable drop in vehicle market shares in other countries in Africa, they attributed the quantum loss in Nigeria’s case study to the recession, which is hitting hard on people’s and organisations’ ability to purchase cars.

However, they frown at the failure of government to pursue its policy frame-work, demarcating growth in the industry based on products from locally based auto firms, as against the influx of the market with fairly used cars from Europe, Asia and America.

Government had in 2013 initiated a programme aimed at assisting auto manufacturing companies build their assembly plants in Nigeria, as to improve on the valued added services in the industry.

This was to be achieved through loan facilities and some import waivers to the players.

It was expected that 10 years after the programme, vehicle importation into the country would have dropped by 60 per cent.

But official sources said this could no longer be feasible with the recession, which has taken its toll on all business activities and government programmes.

However, the Bank of Industry (BoI) is in collaboration with the National Automotive Design and Development Council (NADDC) to intervene in the automobile sector to help develop Small, Medium and Micro-Enterprises (SME’s) through supporting programmes.

The fund was also meant to create an enabling environment to allow existing assembly plants to grow and attract other foreign investors in the sector into the country as well as increase local content participation in vehicle assembly.

Though the Director General NADDC, Mr. Aminu Jagal, on Wednesday disclosed that a total sum of N13 billion had so far been approved and disbursed to 32 companies under the Auto Development Fund scheme only about N7 billion was so far paid.

This has left the council with 53.8 per cent of its loans to the operators unpaid, which is feared might slip into bad debts.

But Jagal said the council and the BoI were expected to enhance the growth and development of auto assembly plants, as to drastically reduce the number of imported vehicles into the country.
By Emma Eke….

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