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Manufacture cars in Nigeria, get FG-approved 10-year tax waiver

Manufacture cars in Nigeria, get FG-approved 10-year tax waiver

The Federal Government has given a 10-year pioneer tax waiver to local car manufacturers to promote local production and discourage importation.

The disclosure was made by the Director-General, National Automotive Design and Development Council (NADDC), Jelani Aliyu, on Thursday in Katsina during a visit to State Governor, Aminu Masari in Abuja, on the creation of Katsina automotive village with the help of NADDC.

Yusuf, the man who designed an electric car for General Motors, said the waiver will help manufacturers setting up in the country to recoup their huge investment as automotive plants are capital intensive.

Recall that Nigeria which produced 140,000 vehicles in 1986 suffered a dip and complete cessation of assembling cars after the combined effect of a structural adjustment programme, and the drop in the price of crude oil in 1986 from $27 to $10, set in.

Speaking in Katsina, Yusuf said, “We are giving a ten years holiday to stop the importation of used vehicles plus a 35 per cent levy and 35 per cent duty adding up to 70 per cent. But when they produce the vehicles in Nigeria it goes down to 10per cent or even 0 per cent so they can more easily cover their investment and be at an advantage.

“As soon as President Muhammadu Buhari signs the auto policy into law, I can assure Nigerians that big companies like Volkswagen and others that we signed Memorandum of Understanding (MoU) with in 2018 will come to the country and invest again.

“With the diversification of the country from oil to non-oil, the automotive sector plays a very strong role; it has the capability to provide thousands of direct and indirect jobs.

“Nigeria spends not less than $8billion yearly to bring in cars from abroad; they bring in about 300,000 to 400,000 cars from abroad every year. On Nigerian roads we have about 11million vehicles and the breakup of those vehicles are cars, buses up to 6.7 commercial, government owns about 1,350, 000, including diplomats all add to 11.5million vehicles on Nigerian roads.

“Most of these vehicles brought into Nigeria are old; some are between 10 and 20 years old; again, all these monies leaving Nigerian shores are actually fuelling jobs abroad while we continue to have high unemployment rate in the country, not to say that all these monies going out and vehicles coming in are not contributing anything to the industrialisation of Nigeria.

“Years back, we had Peugeot and Volkswagen producing vehicles, by 1980 we had three commercial vehicle plants, Steyr, Anamco and Leyland and together we were producing 140,000 new vehicles. Peugeot assembly in Kaduna had up to 40 per cent local content, 40% of the components of Peugeot were actually made in Nigeria at that time.”

Nigeria Everyday reports that the immediate past Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, had said last January that the nearly N3 trillion ($8 billion) Nigerians spend in importing vehicles annually is proof that there is a large market for a viable automotive industry in the country that will create jobs and contribute to the growth of the Nigerian economy.

He spoke at the kick-off of the Nigeria-Volkswagen meeting intended to explore and exploit the auto industry in the country.

Volkswagen was a major player in the country’s automobile industry for decades, assembling its cars from its factory in Nigeria. It packed up and left due to a downturn and unfavourable operating conditions over two and half decades ago.

Efforts are on at different levels to bring the manufacturer back as a major player.

Enelamah said that the development of the country’s automotive industry is a key plank of the FG’s Economic Recovery and Growth Plan (ERGP) which aims to grow the economy, invest in Nigerians and build a globally competitive economy.

Enelamah spoke in Lagos at the Volkswagen kickoff event with senior management of the automaker led by Thomas Schaefer, the Head of Sub-Saharan Region and Managing Director, Volkswagen South Africa.

The kickoff workshop was organized for the two sides to agree on the next steps and concrete action plans needed to operationalize a September 2018 agreement for Volkswagen to lead development of Nigeria into an automotive hub.

At the event, Schaefer said: “Africa’s time is now and Nigeria’s time is now. There’s no doubt about that. Volkswagen is more than happy to play the pioneer role and be the role model that will spur the interest of other global players in the Nigerian automotive sector.”

According to the Ministry, the two sides spoke about the commercial viability of setting up an auto industry, and discussed various plans and strategies to ensure growth of demand for new cars in Nigeria and reduction of running cost.

The federal government incentives for the sector were also discussed. At the end of the meeting, three working groups were activated to work on demand, investment and operational costs

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