Federal Government Urged to Approve NAIDP 2024-2034 Act to Strengthen Automotive Industry

The Federal Government of Nigeria has been urged to pass the National Automotive and Industrial Development Plan (NAIDP) Act into law to bolster investor confidence in the automotive industry.

WAAS Conference Chairman, Luqman Mamudu, an automotive industry expert and former Adviser to the Government on Automotive Policy, made this call on Thursday at Radisson Hotel, Lagos, during a speech on "Nigeria Automotive Industry: Potential for Economic Development." The speech was delivered at the inaugural Nigeria Auto Industry Summit, organized by the Nigeria Auto Journalists Association (NAJA) in collaboration with the National Automotive Design and Development Council (NADDC). Mamudu, who is also the Managing Partner at Transtech Industrial Consulting, emphasized the need for the government to effectively manage used vehicle restrictions while balancing industry requirements and consumer preferences.

Other recommendations to the government included prioritizing automotive parks in partnership with the Nigeria Free Trade Zone Authority and completing Automotive Safety Test Centres nationwide by 2025.

Mamudu stated, "The auto industry Act, if properly implemented after being passed, is a pipeline for Foreign Direct Investment (FDI) in the form of Manufacturing Plants. Global OEMs will establish manufacturing plants in different countries to capitalize on local demand and reduce production costs based on the prevailing investment environment. This often results in economic growth and an increase in the country’s industrial capacity."

He elaborated that a robust automotive industry can leverage manufacturing capabilities to meet local demand for vehicles and related services and for export. This diversification drives economic growth. Exporting automotive products generates foreign exchange earnings and improves the country's balance of trade."

The NAIDP has yet to make any significant strides as imported second-hand vehicles continue to undermine local operations," he added.

Mamudu also highlighted that the automotive industry is a significant employer, creating both direct and indirect job opportunities. The establishment of manufacturing plants and related facilities leads to job creation across various sectors, contributing to overall economic development and prosperity.

He noted, "The entry of NISSAN and other local assemblers in 2014, following the launch of the NAIDP Act, played a significant role in generating employment. By 2017, the NAIDP resulted in the employment of over 3000 new personnel in the industry."

Mamudu emphasized that developing the automotive industry through indigenous and international companies will result in massive employment and increased tax revenue for the government. These companies will generate profits and contribute to the local economy through corporate taxes, personal taxes, duties, and other forms of taxation."

When the country hosts one or two global key OEMs, others are likely to develop an interest in that country, enhancing its brand for global reach. Successful operations improve a country’s visibility, competitiveness, and reputation as a reliable, high-quality manufacturer, attracting further FDI and economic growth," he said.

Mamudu suggested that the limited activities of companies under NAIDP since its inception may have positively impacted Nigeria's GDP, even though the tax-to-GDP ratio remains one of the lowest in the world at about 8% in 2023. He asserted that the industry presents a platform for technological and innovative advancements."

The industry is constantly evolving with advancements in technology, such as electric vehicles, autonomous driving systems, and connected car technologies. The host country has the opportunity to adopt these innovations, driving progress and competitiveness in the local industry," Mamudu concluded.

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