ROLE OF THE NADDC

The National Automotive Design and Development Council was formed by Act no. 83 of 30th May 2014 from the merger of the National Automotive Council and the Centre for Automotive Design and Development as a Parastatal of the Federal Ministry of Industry, Trade and Investment.  The Act merged the functions of the two organisations as enumerated below.

In many countries around the world, the automotive industry plays both a strategic and catalytic role in economic development in respect of the following:

    • Employment creation (with the potential to contribute up to 10% of jobs);
    • GDP contribution (up to 10%);
    • The beneficiation of raw materials and local industrialisation through the value chain which spans a range of activities which include design and development, manufacturing and service related activities such as marketing and sales and maintenance / after sale service;
    • Small, Medium and Micro-Enterprises (SME) development in respect of automotive parts, components and services;
    • Skills development;
    • Technology and innovation (Research & Development).

The NAIDP was therefore developed to amongst other things achieve the benefits enumerated above. The plan is therefore intended to drive the comprehensive development of the automotive industry in the long run and make Nigeria a regional powerhouse in the industry. It contains a number of policy measures needed to revitalize the industry so that it can fulfill its potential to our economy in terms of job creation, local value addition, technology acquisition and as a precursor to our industrialization. The policy has six major elements:

  1. Standards
  2. Industrial Infrastructure
  3. Local Content Development
  4. Skills development
  5. Investment Promotion
  6. Market Development.

The National Automotive Design and Development Council was set up primarily to initiate, recommend and supervise policies and programmes for locally manufactured vehicles and components.  The functions include the following:

  1. Regularly study and review the automotive parts/ components development industry in Nigeria;
  2. Evolve a local content programme specifying which component parts are to be continuously deleted from the imported Completely Knocked Down (CKD) parts;
  3. Recommend incentive and protective measures for the development of the Nigerian automotive industry;
  4. Appraise and recommend new models of vehicles envisaged for the Nigeria market to ensure model rationalisation;
  5. Identify and classify the components and parts which can be standardized to ensure their interchangeability;
  6. Regularly evaluate the pricing structure and quality of the products of the Assembly Plants as well as imported vehicles and parts to ensure international competitiveness;
  7. Forecast the demand and supply patterns for various types of automotive vehicles produced in Nigeria and the basic raw materials requirements and equipment;
  8. Encourage the development and production of raw materials such as sheet metal, alloys and special steel needed by the automotive industry;
  9. Regularly review the penalties to be imposed for non-compliance with the guidelines and programmes specified by the Council;
  10. Carry out inspection and other quality assurance activities in factories, ports and roads in pursuance of other objectives specified above;
  11. Research, design, develop and test low cost vehicle prototypes;
  12. Establish referral auto-test centres to provide technical support services to automotive sub-sector;
  13. Liaise with the Association of Local Content Manufacturers of Nigeria, Manufacturers Association of Nigeria and other stakeholders to ensure that the existing installed capacities are fully utilised;
  14. Draft and recommend standards for the automotive industry;
  15. Develop programmes for the acquisition of technology for vehicles and components design, manufacture and assembly;  
  16. Implement the National Automotive Policy;
  17. Develop and regularly review criteria for determining an automotive manufacturing plant;
  18. Mandate vehicle-manufacturing companies that import more than 10,000 vehicles of any brand per annum to establish an assembly plant in Nigeria;
  19. Monitor and ensure compliance with paragraph (r ) of this section by setting a procedure for enforcement under this Act; and
  20. Perform such other functions as may be assigned it by the Minister from time to time.

NADDC’s mandate is to revitalize and grow the Nigeria automotive sector because of its multiplier effect on the economy.  Nigeria has all the critical elements to develop a sustainable automotive industry. It has a large domestic market to meet critical output and trainable manpower abound.   After due consideration of the strategic comparative advantages and benefits of a well-developed automotive sector in Nigeria, the Federal Government on 1st July, 2014 launched the National Automotive Industry Development Plan, often referred to as the new National Automotive Policy.

The Role of NADDC in the National Automotive Industry Development Plan (NAIDP)

STANDARDS

The quality of vehicles assembled in Nigeria must meet international standards to be competitive.  Council, under the NAIDP has elaborate provision to address both infrastructural and human capacity needs. This includes the establishment of automotive test centres. The Civil works for Council’s automotive Test laboratories have reached 90% completion and approval for the purchase of the equipment has been given by the FEC. When completed, the facility will test vehicle emission, safety components/parts, materials (Metal, Plastic, and Rubber) and undertake full vehicle evaluation. The strategic targeting of international OEMs into Nigeria’s auto industry will also enhance overall product quality and standards.

INDUSTRIAL INFRASTRUCTURE

The policy facilitates the creation of automotive supplier parks and clusters to provide shared infrastructure, resources, information, knowledge and technical expertise. This will enhance competitiveness, learning and technical innovation. NADDC has been engaging state governments in the three existing auto-clusters in Nigeria, namely Lagos-Ogun-Oyo, Kaduna-Kano and Enugu-Anambra. 200 ha of land has been obtained in Osun and Kaduna states. Arrangement to obtain 100 ha in Anambra state will soon be concluded. In addition, we have received land offers for the auto supplier park from Cross River, Delta states, Edo State

LOCAL CONTENT DEVELOPMENT

A local content strategy has been developed by Council. It aims to develop technically competent suppliers who can keep abreast of developments in the industry. The strategy addresses three major issues: technical competence, industrial performance and government policy.

SKILLS DEVELOPMENT

Mechanics’ Training
The Council produced a new curriculum and textbooks to teach mechanics new vehicle technology and are being used nationwide. The Council also equipped six workshops nationwide as reference mechanics’ teaching centres and partially equipped four other centres, including the Lady Mechanics Initiative. These centres (plus others) were used by the Council to train 2000 mechanics in 2014-15 under the SURE-P programme.

Degree Programme in Automotive Engineering
With the Nigerian Universities Commission (NUC), Council developed a degree programme in automotive engineering which three universities are offering: University of Ibadan, Elizade University and Abubakar Tafawa Balewa University Bauchi.  The University of Lagos and Ahmadu Bello University will also offer the course soon. We are also liaising with JICA and giz to train their staff in automotive engineering.

INVESTMENT PROMOTION

Fiscal Measures
This is designed essentially to address investors’ apathy by making entry requirement easy.  Provision of incentives and protection measures are in place to restrain inflow of fully built vehicles (FBUs) import (new and used) that tends to undermine balance of payment position and export jobs. The fiscal structure is also designed to ensure a quick build-up of local capacity through a combination of local assembly and concessionary import.  This is to ensure that once restriction is placed on imported second-hand vehicles, there will be sufficient local stock to meet upsurge in demand.

Checking Smuggling
Once restriction is placed on vehicles import, smuggling is likely to escalate through diversion to neighbouring ports.  A digital solution to address this has been built. Integration with the Nigerian Customs and vehicle registration authorities in Nigeria is still been worked on.  Smuggling will undermine the entire industry if not checked.

Policy Consistency Though Legislation
In order to prevent policy somersault by successive regimes of government, the NAIDP has been legislated. The bill which has been passed by the National Assembly, now awaits presidential accent.

MARKET DEVELOPMENT

Vehicle Credit Purchase Scheme
Nigerians desire to obtain new automobiles is constrained by the absence of affordable automobile credit purchase scheme. NADDC is establishing a fund supported by levy on imported fully built vehicles. With this fund, both individuals and corporate entities will be able to procure new vehicles and pay over a convenient period of tenure.

Patronage
The patronage of the products of the Nigerian automotive industry by government and its agencies is necessary for the success of this programme. The Federal Government is already committed to patronize local products, as it has directed all MDAs to patronize indigenous auto assemblers in its vehicular procurement. We are working to ensure state governments follow suit.

 

STATUS OF THE AUTOMOTIVE POLICY IN NIGERIA

Achievements
  • Presently, 54 companies have been registered for assembly, 28 of these companies are currently assembling. A total installed capacity of 408,870 Units and a total actual production of 8,473 Units have been achieved so far;
  • 28 companies are currently listed under the Bereau of Public Procurement for Patronage of Indigenous Companies;
  • The electronic platform for anti-smuggling and the automotive Credit Purchase Scheme have reached 80% in preparation.  The platform, which is web-based (www.narp.gov.ng), was test-run in May 2015 and awaits the full integration of the NCS vehicle Identification Number (VIN) data capture on Nigeria Customs Information System (NICIS);
  • The Automotive Test Centre infrastructure development has reached 80% completion and the laboratories will be commissioned shortly.  These are material test laboratory in Zaria, emission test laboratory in Lagos and component test laboratory in Enugu. Civil work will be completed soon and orders for equipment has been placed;
  • Currently Council through the Automotive Development Fund (ADF) has provided loan facilities to 57 companies amounting to 12.575 Billion. 29 applications are been processed at the Bank of Industry.
Challenges to the Automotive Policy Implementation and Adopted Remedies
S/N Challenges Remedy
1 Challenges arising from customs administration and poor infrastructure limits on logistics a) Provision of Chapter 98 in the NAIDP bill for ease of Customs administration. The bill has been passed by the both Chambers of the National Assembly and awaits Presidential Accent

b) Planned workshops for NADDC, NAMA, FMF, and NCS schedule officers on procedures, definitions and policy environment. Earlier workshops were limited to Heads of departments. No trickle down impact.

2 Possible policy summersault and the ease of doing business The NAIDP has been Legislated. It awaits Presidential Accent to make it Law and this is to be done shortly
3 Low Patronage of locally assembled vehicles a) Made in Nigeria Automobile Credit Purchase scheme;

b) Automotive repository portal to take effective control of industry, plan, monitor and inform investment decision

4 Unrestrained import of Pre-owned automobiles and smuggling including grey import A National Automotive Repository Portal, which serves as a VIN repository for duly imported and Locally assembled vehicles has, been developed. It is intended to be cross-referenced by vehicle Licensing Authorities before issuance of vehicle licenses, to forestall smuggling
Forward Opportunities For Nissan In Nigeria

Market Opportunity:
There is a huge potential market for brand new vehicles in Nigeria. It is estimated that about 100,000 brand new are imported annually into the Country. With total actual production less than 10,000 Units, there is still a 90,000 unit deficit to be covered. This presents a huge market share available for grabs.

Access to Local Raw Material:
Nigeria has a huge deposit of natural resources, one of which is petroleum. OEMs such as NISSAN, can harness the huge deposit petro-chemical and allied raw materials required in the automotive industry.

Annual Renewal of Bonafide Manufacturer Status and other Incentives by Government.

Patronage by Government through the Bereau of public Procurement directive.

Accessing of Forex at the Central Bank of Nigeria Autonomous rate with Government Intervention.

Increased income to NISSAN:
An estimated 410,000 units which amounts to about N600 Billion (each car estimated to cost an average of N1.5Million) are imported annually. If the NISSAN group ramps up production there is potential to increase revenue by more than 200% annually.