Nigeria’s Auto Production Industry Still has a Long Way to go


Wednesday, December 09, 2015 9:00 AM / FBNQuest Research

Nigeria relies heavily on auto imports and this puts pressure on the country’s annual import bill. Industry players estimate that a minimum of 500,000 cars are imported on a yearly basis, with over 80% being used cars (tokunbos). 

To promote the application of skills and technology in auto manufacturing and domestic car assembly, the FGN re-launched the automotive policy in October 2013. Public views on the policy are mixed.  

Some argue that Nigeria is not ready to take on full implementation of the policy. The country’s poor power infrastructure network which keeps operating costs high is one of the many roadblocks prospective auto manufacturers face. 

According to National Automotive Design and Development Council (NADDC), proper implementation of the policy could lead to the assembly of 500,000 vehicles per annum compared with 100,000 assembled in 2014. 

The CBN's latest External Sector Development Report reveals that in Q1 2015 manufactured products accounted for 15.2% of fx utilisation for visible imports. There are no clear definitions in the report. However, we believe auto imports fall into this category.  

The latest national accounts (Q3 2015) provided by the National Bureau of Statistics (NBS) show that the motor vehicles & assembly segment of the manufacturing sector contracted by -8.7% y/y, compared with 24% growth recorded in the corresponding period in 2014. These figures for the segment, as for many others, reflect the current macro challenges.


It is not clear if the new government will carry on with the existing automotive policy.  Recently, the Vice President, Yemi Osinbajo, indicated that there may be need for high tariffs on used vehicles. However, he urged the NADDC to create a comprehensive vehicle credit purchase scheme that could accommodate middle- to low-income earners.


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