‘Nigeria’s Automotive Industry Below 1 Per Cent of Global Share’

Despite multiple efforts to position Nigeria’s automotive industry globally, Nigeria and other African countries still contribute less than one per cent to global auto and auto-component production.

This was revealed by the National Automotive Design and Development Council in its Nigerian Automotive Industry Development Plan.

NADDC noted that there were several regional economic communities within Africa such as the ECOWAS and EAC, intra-African trade, and initiatives like the African Continental Free Trade Area Pan-African Auto Pact by the African Association of Automotive Manufacturers aiming at fostering collaboration and innovation within the continent’s automotive sector.

However, these initiatives have continued to be at sub-par and challenged by several factors, including insufficient transport infrastructure connecting markets, high tariffs, and operational difficulties among member countries.

The NADDC noted: “The African Continental Free Trade Area Agreement which came into effect in January 2021, offers an opportunity for the continent to deepen market integration at both regional and continental levels, boost intra-African trade while promoting regional and continent-wide value chains.

“This offers a significant growth opportunity for the African automotive sector, which has hitherto, played a limited role in the global automotive industry, accounting for less than 1 per cent of global auto and auto-component production.”

Further, the report stated: “Specifically, the AAAM, working with African countries and the AfCFTA Secretariat has developed a Pan-African Auto Pact to encourage specialisation and economies of scale across the continent with TRIMS arrangements enabling participant country industries to rebate duties on the product imported from other participant countries.”

It further noted that the level of local content within the industry was low which also impacted aggregate employment.

According to NADDC, growing both local content and employment in the automotive industry were key government plan objectives and were at the very core of the underlying reason for government support for the industry.

“Support for auxiliary industries and the transition from SKD manufacturing to CKD manufacturing is also paramount to the progress of the automotive industry as more value, jobs and production units are more pronounced and its contribution to the economy is also higher.

“The existing auto assemblers in the country also need to expand their capacity to meet these goals”, it stated.