THE NATIONAL AUTOMOTIVE COUNCIL NIGERIA (NAC)
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The National Automotive Council Establishment of the National Automotive Council
produce a National Automotive Policy. The draft policy received Presidential approval and Transitional Council
Introduction
endorsement on the 30th of December 1992 and 10th of
The Automotive Industry constitutes a very potent force
August 1993 respectively and the formal launch took place
in the socio-economic development of a country. The
on the 23rd August 1993.
vital contributions made by this industry led to the rapid
The thrust of the National Automotive Policy is to ensure the
transformation of the leading South East Asian economies
survival, growth and development of the Nigerian automotive
(South East Asian Tigers) from primary under-developed
industry using local human and material resources. This is
economies to world rated industrial giants, in the second
with a view to enhancing the industry’s contribution to the
half of twentieth (20th) century. This is widely recognized
national economy, especially in the areas of transportation
and well documented. The industry had earlier made
of people and goods. The elements of this objective include:
significant contributions to the industrial development of developed economies. In Nigeria the auto industry dates back to the early 1960s when private sector initiatives pioneered the establishment of auto assembly plants. The pioneering efforts included those of UAC, Leventis, SCOA, BEWAC and R.T. Briscoe. In the 1970s, the Federal Government became involved in the auto industry, with the establishment of two cars and four truck assembly plants. Government involvement was based on its desire to fast-track Nigeria’s industrial development and to control the strategic sectors of the economy (the Federal Government has since made a
1.
reversal and privatized the assembly plants). The Nigerian automotive industry performed well, assembling vehicles
Provision of automotive vehicles for urban and rural areas
2.
with increasing local content until 1986, when its fortunes
Accelerated technological development of the Nigerian economy
began to slide, a trend that has continued since. The auto
3.
Increased employment opportunities for Nigeria
industry has continued to be undermined by a number of
4.
Conservation of scarce foreign exchange
inhibiting factors, which includes – lack of basic industrial
5.
Establishment of an integrated automotive industry in
infrastructure, high cost of industrial services, erratic supply and high cost of utilities, low tariffs on imported fully built
Nigeria 6.
units as well as inconsistency in government policy.
Standardisation and rationalization of the Nigerian automotive industry
7. The National Automotive Policy
Increase
private
sector
participation
in
the
establishment of the auto industry
The absence of a clear National policy for the sector was
8.
Technology acquisition
identified as the cause of its inability to adjust for survival
9.
Creating conducive operational environment
through
in the face of changing economic environments. Given this
the introduction of appropriate fiscal and monetary
consideration, the Government facilitated a stakeholder
incentives
meeting through a Standing Technical Committee on National Automotive Industry (STC on NAI) in 1992, to
The National Automotive Council
The National Automotive Council as a Parastatal of the
vii) The Federal Ministry of Commerce and Industry.
Federal Ministry of Commerce and Industry was established by Act 84, 1993 to implement the National Automotive
Governing Board Committees
Policy. The functions of the Council include the following:
The Governing Board of the Council has three standing Committees. They are:
(i) Regular study and review of the automotive parts/ components development industry in Nigeria;
1. Policy, Planning and Establishment Committee 2. Technical Committee
(ii) D eveloping a local content programme specifying which
3. Finance and General Purpose Committee
component parts are to be continuously deleted from the
Structure of National Automotive Council
imported CKD’s (iii) R ecommending incentives for ensuring compliance with approved local content programmes
The Secretariat of the Council is charged with the day-to- day administration of the council and is headed by the Director
(iv) Approve and recommend new models of vehicles
General. It is presently operating with three departments
envisaged for the Nigeria market to ensure model
namely: Administration, Finance and Accounts; Policy and
rationalization
Planning and Industrial Infrastructure which are headed by
(v) Inspection
and
other
quality
assurance
activities
Directors.
in factories, ports and roads in pursuance of other objectives specified above
Administration, Finance and Accounts
(vi) Regular evaluation of the pricing structure and quality
The department is responsible for providing and managing the
of the products of the Assembly Plants to ensure
human resources, handling all matters relating to appointments,
international competitiveness
promotions, discipline, training, staff welfare. Other functions
(vii) Forecast the demand and supply patterns for various types of automotive vehicles produced in Nigeria and
of the department include: management of funds; payment of staff salaries, allowances and other entitlements.
the basic raw materials (such as sheet metal alloy and special steel)
Policy and Planning Department
(viii) Regular review of the penalties to be imposed for
The department is responsible for planning, implementation
non-compliance with the guidelines and programmes
and evaluation of the council’s programmes; UNIDO matters,
specified by it.
procurement operations, project monitoring, generates statistical data, conduct industrial and sectoral studies.
Vision: To facilitate the production of components and vehicles of international standard at competitive prices by
Industrial Infrastructure Department
the Nigerian automotive industry.
The department is charged with the coordination and implementation of policies to promote the development of
Mission: To ensure the survival, growth and integrated
local components and parts, monitoring of the local content
development of the Nigerian automotive industry using local
deletion programme of auto component, identification and
human and material resources.
classification of components and parts for standardization.
Organisational Structure Automotive Council
of
the
National
Funding The Act establishing the council provided for the
The Council is made up of the Governing Board, its
establishment of a fund which consists of a 2% levy on the
Committees and the Council Secretariat. Membership of
cost, insurance and freight (CIF) value of all imported fully
the Governing Board is drawn from relevant agencies and
built units (FBU), auto components, spare parts, completely
comprises representatives of the following:
knocked down (CKD) and raw materials imported for the
i) Nigerian Automotive Manufacturers Association (NAMA)
automotive sub-sector. The fund is meant purely for the
ii) Automobile Local Content Manufacturers Association of
administration of the council, staff training, direct intervention
Nigeria (ALCMAN)
in the sector in form of soft loans and research. Collection
iii) S tandards Organisation of Nigeria (SON)
of the levy started in November 1994 and was stopped in
iv) Raw Materials Research and Development Council
May 2007. Total amount in the fund on the 31st December,
(RMRDC)
2009 is in excess of N15 billion which is being managed by
v) Manufacturers Association of Nigeria (MAN)
Bank of Industry (BOI) under the managed fund agreement
vi) Nigerian Society of Engineers (NSE)
whereby NAC continues to meet its budgetary requirement.
Programmes and Projects (i) NAC – Automotive Development Fund (NAC-ADF)
Production of Auto Lubricating Grease of Various Grades
A major factor that inhibited the development of the
from Petroleum Oils, Hexose Cassava and Saponification
sub-sector was the absence of long-term funds at
Materials” with N 4.00 million
concessionary interest rates. NAC- ADF has substantially addressed this issue with the funding of 27 projects out
(iii) Local Content Development Programme
of 70 applications received to date. Total disbursement
Automotive manufacturers produce about 30% of nearly
as at 31st July, 2010 stood at N9.9 billion.
2,000 parts in a typical car, the rest they purchase from small and medium industries. This will result in huge employment opportunities and acquisition of technology. Local manufacturers have the capacity to meet the demand by both local and foreign assemblers. Accordingly the council: (i) H as commissioned the production of project profiles for some bicycle, motorcycle and vehicle parts (ii) D eveloped import deletion programmes for bicycles and motorcycles (iii) Is developing capacity for computer aided design (CAD), engineering (CAE) and manufacture (CAM) (iv) Is providing soft loans for the production of auto parts and components (v) Is providing research and development grant to develop auto parts and components. (iv) Establishment of an Automotive Test Centre NAC want to establish a test centre to achieve the following objectives:
© Flickr/Ashley Palmero
•
To ensure the safety and health of Nigerians
(ii) Specialised Auto Industry Research Fund
•
To develop local automotive content
The council supports R&D work aimed at advancing the
•
To ensure the good operation and maintenance of
frontiers of technological development in the sub-sector. A project, “The Developent of Production Tools for the
Nigerian vehicles •
To obtain capability to conduct homologation tests
Commercial Production of 3HP Petrol engine” submitted by Prof. A. O. A. Ibhadode, University of Benin, Benin City
The feasibility study for the establishment of the test
has been funded with N3,335,850.00 (three million, three
centre has been concluded, and preliminary activities for
hundred and thirty five thousand, eight hundred and fifty
its establishment have started.
naira only) and Berekotry Industries Nigeria Ltd. project“
(v) Capacity Building in the Repairs and Maintenance of
Automobiles inNigeria
to aid policy initiation, formulation, implementation and to
The council in its efforts at capacity building in the
assist prospective investors in their investment decisions.
repairs and maintenance of new generation vehicles has,
It has therefore developed an internet based platform to
in collaboration with other stakeholders carried out the
capture data from 18 data sources including that of all
following:
vehicles registered in Nigeria, automotive components
manufacturers, assembly plants, car dealership etc...
(i) D eveloped a curriculum and training manual for teaching automotive mechatronics in the informal
Conclusions
sector
With the anticipated conclusion of the merger of the
(ii) Acquired mechatronics diagnostic equipment and tools for training Nigerian auto technicians.
National Automotive Council (NAC) and the Centre for
Automotive
Design
and
Development
(CADD)
plus the long term plan for the automotive industry in (vi) Campaign for Patronage of Made in Nigeria Automotive
2010, the Council will develop synergy to actualize the
Products
implementation of the National Automotive Policy. In
The council has intensified the campaign for the
addition, the establishment of the Automobile Test Centre
patronage of local automotive products to shore up
will be pursued to enable complete testing of vehicle
capacity utilization, local content development and
parts and promote the production of globally competitive
employment generation.
automotive products to sustain domestic demand and take advantage of export opportunities.
(vii) Industrial Environment Surveys and Sector Studies The council in its drive to attract Foreign Direct Investment
The Council will continue to pursue its programmes and
(FDI) into the Nigerian auto industry concluded preliminary
projects with a view to realizing the potential gains of
work towards undertaking a national survey of consumer
the automotive sector to the Nigerian economy. These
preference profile for automobiles in Nigeria. This has
include:
remained an essential request by potential investors in the Nigerian automotive industry for years.
Large scale employment generation Acquisition of technological know-how
(viii) National Automotive Data Base
Effective utilization of local raw materials and resources
The council places premium on reliable and timely data
Foreign exchange savings and earnings
Aminu Jalal Director-General National Automotive Council
Investment Opportunities Within Nigeria’s Automotive Industry bicycles is one million units of each. The country has
Introduction
the capacity to produce these, but locally produced
The automotive industry in Nigeria has tremendous
units average only 20 percent in the motorcycle industry
opportunities in the manufacture of vehicles, spare parts
and 40 percent in the bicycle industry. The Nigerian
and components. This paper looks at the auto industry in
Government aims to encourage the increased local
Nigeria, the potential areas of investment, the incentives
content in motorcycles to 50 percent and in bicycles
available to investors in the sub-sector and the raw
to 100 percent by the end of 2011. This requires new
materials and manpower situation.
investment to produce the needed components and spare parts.
The Automotive Industry in Nigeria The automotive industry in Nigeria is over three decades
Investment Opportunities
old and has the capacity to produce 108,000 cars as well as 56,000 commercial vehicles, 6,000 tractors, 1.2
Investment opportunities in the manufacture of vehicles
million motorcycles and a million bicycles annually. There
The high demand for used vehicles translates into a
are over 50 auto-component manufacturers, some of
need for new investment in the manufacture of low cost
which are original equipment manufacturers, with others
vehicles. A low cost utility vehicle would service the
supplying the after-sales market. Capacity utilisation in
needs of the majority of Nigerians who live in the rural
the sub-sector, which was 90 percent in 1981, currently
areas. There are facilities already in the country for the
stands at only at ten percent in automotive assembly and
assembly of cars and light commercial vehicles. Most
40 percent in components manufacture.
of these facilities are currently under utilized and could be used by potential entrepreneurs. There are also well
Demand and Supply of Vehicle and Spares
established component suppliers who will supply many of the auto components required.
Motor Vehicles The vehicle demand in Nigeria is about 75,000 for new
Investment opportunities in the manufacture of auto
and 100,000 for used vehicles. Over five million vehicles
components and spares
are registered in the country, the majority of which
The
are pre-owned and would therefore require frequent
manufacturing and sub-assembly plants that are fed
maintenance. This translates to a heavy demand for
by heavy engineering industries. These include casting,
spares and components. Other West African countries
forging, presswork, plastic moulding, heat treatment,
also provide a ready market, which is already exploited
surface treatment and machining. Considering that about
by some Nigerian component manufacturers.
70 percent of over five million vehicles plying our roads
automotive
parts
industry
consists
of
many
were bought as used vehicles, there is a vast scope for the Motorcycles and Bicycles
manufacture of servicing and replacement parts. Other
The estimated annual demand for motorcycles and
areas that need investment are in the establishment of
industries for making automotive components, like press
Raw Materials
shops, forge shops and precision machine shops.
The average vehicle has up to 2,000 parts made from
Investment Incentives
steel, cast iron, alloy steel, copper, tin aluminium, wood,
In addition to the general incentives available to investors,
glass leather and plastics. The Aladja Steel Company
there are others that are specific for the automotive
produces steel billets, rods and angles. The Ajaokuta
industry:
Steel Company, when completed, would produce steel sheets, pig iron and alloy steel. The Eleme Petrochemical
1. Import duty for ‘Complete Knock Down’ vehicle
Complex produces polypropylene, polyethylene, ethylene
assembly is 5 percent, while that for fully built units
and propylene. The Aluminium Smelter Company
is 20 percent
produces aluminium ingots. Though some raw materials
2. The Nigerian Government has mandated all its
would still need to be imported, the low labour costs in
ministries, agencies and parastatals to patronise the
the country enable even factories with 100 percent of
products of local automotive assembly plants
imported raw materials to be economically viable.
3. The National Automotive Council has established an Auto Development Fund to provide soft loans for
Manpower
industries that will produce auto parts
There
are
many
technical
schools,
polytechnics
4. The automotive industry has the status of a ‘pioneer
and universities in Nigeria that produce craftsmen,
industry’, which grants a five year tax holiday
technicians, technologists and engineers of the highest
anywhere in the country and seven year tax holiday
calibre. The various motor assembly plants, foundries,
in any economically disadvantaged local government
steel plants and existing auto parts manufacturers have,
area
over the years, trained many Nigerian in various aspects
5. Up to 120 percent of expenses on Research and
of engineering, design, manufacture and management.
Development is tax deductible. For ‘R&D’ on local
Conclusion
raw materials, 140 percent is allowed 6. Industrial establishments that have in-plant training
The Nigerian automotive industry offers significant
facilities enjoy a two percent tax concession for a
investment opportunities in the manufacture of vehicles,
period of 5 years
motorcycles and bicycles, their components and spares.
7. 20 percent of investment in infrastructure (such as roads, water and electricity) is tax deductible
needs to ensure that more components are produced
8. Industries in economically disadvantaged areas would
enjoy
an
additional
5
percent
This is particularly true where the federal Government
capital
depreciation allowance, over and above the initial
locally. Nigeria also has the vast potential to become the leading vehicle manufacturing centre for the Economic Community of West African States (ECOWAS).
allowance 9. Industries with high labour to capital ratios are entitled
to
the
following
concessions:
Those
For further information contact:
employing 1,000 people or more will enjoy a 15
The Director-General
percent tax concession, those employing 200 or
National Automotive Council
more will have a 7 percent tax concession and those employing 100 persons or more have a 6 percent tax
23, Parakou Crescent
concession
Off Aminu Kano Crescent, Wuse II
10. Engineering industries with high ‘local value added’
P.M.B 320, Garki, Abuja.
will enjoy a 10 percent tax concession for 10 years 11. Expenses incurred on expansion, modernisation and/or diversification will attract allowances 12. Engineering industries using up to 60 percent local raw materials in their manufacturing process would
Tel: +234 (0) 707 220 6911-3 E-mail: a minujalal@yahoo.com aminujalal@nac.gov.ng luqmanmamudu@yahoo.co.uk
attract a 20 percent tax credit for five years 13. The Federal Government has recently established a bank for the industry in order to provide long-term loans to industrial projects
www.nac.gov.ng
CREDITS Editor Sylvia Powell for Henley Media Group Ltd.