The
proposed investments in assembly operations by Peugeot Automobiles of Nigeria
(PAN), Innoson Vehicle Manufacturers, VON Nigeria, among other automobile
dealerships in Nigeria, are expected to push up the manufacturing sector’s
contribution to the country’s Gross Domestic Product (GDP), BusinessDay has
learnt.
The
implication of this is that motor vehicles and assembly’s current contribution
of 0.8 percent to the manufacturing sector will increase significantly, going
by the volume of ongoing and proposed investments in the sub-sector.
Consequently,
the manufacturing sector’s current GDP contribution of 9 percent, which
represents about $46 billion of Nigeria’s $510 billion GDP, is also expected to
increase considerably.
“We
expect investments made by automobile companies to drive the manufacturing
sector’s increased contribution to GDP,” said FBN Capital analysts, led by
Gregory Kronsten, in a September 3 report.
“The
emergence of the auto policy may catalyse the revival of the tyre manufacturing
industry. Dunlop and Michelin used to have a strong presence in Nigeria. It
also bodes well for companies that engage in the local production of rubber,
such as Okomu Oil,” said the analysts.
According
to the Manufacturers Association of Nigeria (MAN), the country’s manufacturing
sector has 10 broad sub-sectors, which include food, beverage and tobacco;
textile, apparel and footwear; wood and wood products; pulp, paper, printing
and publishing, and chemical and pharmaceuticals.
Others
are non-metallic products; domestic/industrial plastic and rubber; electrical
and electronics; basic metal, iron and steel, as well as motor vehicles and
miscellaneous assembly.
Data
from MAN show this sector made N760.16 million investments in the first half of
2013 (H1 2013), while a total of N571.97 million investments were made in the
second half of the year (H2 2013).
But
since the launch of the Nigeria Industrial Revolution Plan (NIRP) in February
2014, significant investments have been added in the auto industry and along
its value chain.
PAN
Steel Group Corporation from China took advantage of the NIRP to invest $5
billion into a new steel plant in Nigeria that will produce 4-5 million metric
tonnes per annum.
Adeniyi
Ogunsanya, chairman, industrial/SME group, Nigerian Association of Chambers of
Commerce, Industry, Mines and Agriculture (NACCIMA), said last week that a
number of businessmen in the group are also gearing up to invest in ancillary
industries such as bolts and knots, among others.
It had
been earlier reported that a total of 21 automobile dealerships in Nigeria had
made commitments with some foreign technical partners to set up assembly
operations in the country since the announcement of the new automotive policy
last year. Industry watchers say the move will boost local automobile assembly
and discourage the influx of grey and parallel imports into the country.
Other
dealerships which have signed agreements, or
are in discussions with foreign technical partners, include Dana Motors,
Transit Support Services Limited (owned by ABC Transport), Kewalram Chanrai
Group, and Coscharis Motors.
The
NIRP was designed to attract substantial foreign investment inflows in the
short to medium term, and targets N5 trillion manufacturing revenue annually.
It focuses on agriculture and agro-products, metals and solid minerals, oil and
gas, construction and light manufacturing services, particularly the automobile
and textile industries.
In
tandem with the National Automotive Industry Development Plan and the Power
Sector Master Plan, the NIRP has had an impact on the investment inflows into
the auto industry.
At
the launch of NIRP in February, President Goodluck Jonathan said, “The goal of
the Nigeria Industrial Revolution Plan is to increase the contribution of the
manufacturing sector to GDP, from the present four percent to more than 10
percent over the next five years. This will boost the annual revenue earnings
of Nigerian manufacturers by up to N5 trillion per annum.”
Busty
Okundaye, the Nigerian who led the team that set up General Motors in China,
told BusinessDay in an interview that domestication of technology, both the
product and the knowledge, was not an overnight business.
“The
challenge will be in implementation of the new auto policy because it is
just paper work,” Okundaye said.
BusinessDay
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