Odds against the Nigerian car

 

Some Nigerians who have made significant efforts to build made-in-Nigeria vehicles are still crying for support, even as the Federal Government prepares to implement the new National Automotive Policy, writes CHUX OHAI

Aborted dreams of a proper indigenous car

On Friday, April 17, 1998, the British Broadcasting Corporation announced the arrival of the Z-600, which it described as the first ever All-African car in the Z series. The car was built by an automobile engineer, Dr. Ezekiel Izuogu.

In a report titled ‘All African dream car’, the BBC said the vehicle was designed and made in Nigeria “for the family market” and that it was capable of moving at the speed of 140km per hour.

The report also said that 90 per cent of the parts of the Z-600 were produced locally. It continued, “It has a doorbell for a horn. And if it ever goes into mass production, it will cost just $2,000 (£1,195), making it the most affordable car in Africa – and probably the world.”

The prototype of the Z-600, the report added, received a rapturous reception when it was taken round the streets of Lagos.

About eight years later, the Government of South Africa reportedly made an attempt to acquire the rights of the Z-600 from the manufacturer. Its intention was to mass-produce the vehicle in that country. President Thabo Mbeki was said to have personally instructed his deputy to enter an agreement with Izuogu for this purpose.

Unfortunately the deal was still in the pipeline when a major newspaper (not The PUNCH) reported on Sunday, March 19, 2006 that a gang of 12 robbers broke into the factory of Izuogu Motors Limited in Owerri and stole various machines and tools, including a design history notebook of the Z-600, the design file labelled Z-MASS, containing the design history for mass production of the Z-600, as well as the moulds for various parts of the vehicle.

Needless to add, the theft set back the development of an authentic Nigerian car by a minimum of 10 years. In a meeting with journalists after the incident, the man at the centre of the technological leap symbolised by the arrival of the Z-600, Izuogu, claimed that he laboured for 18 years under very difficult circumstances to design and produce the stolen moulds.

 Also, in an online interview with our correspondent, Izuogu put the blame for the delay in the mass production of the Z-600 squarely on the shoulders of government officials and lack of financial support.

He said, “We worked quietly for many years to produce a low-priced African car. It was the duty of the government to encourage mass production of our car. That encouragement did not come.  The government set up a 12-man committee of scientists drawn from all Nigerian research institutions to evaluate the work we did on the Z-600. They visited our factory and assessed the work and then wrote a report to the government. The latter now reacted by directing the then minister of science and technology to personally write to congratulate us on what they called a ‘job well done’. Government also promised to support the project. But the N236m it donated has yet to reach us. The problem was those who implemented government’s policy. These people introduced ethnic sentiments into the whole thing. They felt that one part of the country wanted to do it instead of a ‘national spread’.

He stresses that the only thing stalling the project is money, adding, “Production of the first Nigerian car was not my vision. But, if money had been available, we would have facilitated it for our nation’s pride and utility.”

Izuogu says his company eventually could not accept South Africa’s request to produce the Z-600 in that country because of the terms involved.

More than two decades ago, long before Izuogu built the Z-600, the late Prof. Ayodele Awojobi gave the earliest indication that a Nigerian automobile technology was possible when he converted a Leyland Jeep from the right-hand to left-hand drive and named it Autonov 1.

Awojobi was said to have designed a bi-directional Armoured vehicle that could be moved forward and backward without turning it round. He christened it Autonov 2.

But that was where the celebrated engineer’s effort ended. The then Federal Government did nothing to encourage the mass production of the vehicle.

Although he was pelted with lucrative offers by some corporate organisations in the country for his invention, he turned them down and decided to preserve his design for Nigeria’s future benefit.

Following in Awojobi’s footsteps, legendary musician and sculptor, Sir Victor Uwaifo, also designed and built a speed car in 1995, using a Volkswagen engine. Many years after he drove the vehicle, which he called ‘Vision 01’, from his residence in Benin City to the Federal Capital City and received an award from the organisers of the Abuja Trade Fair in recognition of his feat, neither the government nor private investors have shown interest in his dream vehicle.

A sweet-sour policy

A few months ago, Nigerians across different walks of life woke up to an unexpected development. They learnt that the Federal Government had approved a new National Automotive Policy to revive the local automobile industry and reposition it to play a pivotal role in the development of the economy.

This could be good news, no doubt. Most Nigerians would be proud to identify with an initiative that was bound to usher in development in whatever form.

But the people’s enthusiasm fizzled out as soon as they learnt that the FG also planned to end the importation of cars, especially Tokunbo cars, into the country.

The Minister of Trade and Investment, Dr Olusegun Aganga, was the harbinger of that piece of ‘bad’ news.

Aganga said the FG planned to introduce a new tariff regime to encourage local production of vehicles and to discourage importation.

By the terms of the new tariff, imported cars will attract 70 per cent duty – at 35 per cent duty and 35 per cent levy. This means that the cost of clearing a fairly used vehicle will increase from N100,000 to about N300,000. The implication is that many Nigerians will no longer be able to afford even second-hand cars.

The minister recalled that a similar policy existed in the country in the 1970s and cars were produced locally at affordable prices, but it had failed to yield the desired results due to non-implementation, lack of infrastructure and inadequate tariff regime, among others.

He said that with strict implementation of the new policy, Nigerians would be able to buy a brand new car for less than N1.5m.

Aganga mentioned a couple of goodies likely to accrue from the implementation of the policy, such as increase in job opportunities, reduction in the cost of investments and production, as well as the revival of the petrochemical and metal/steel sectors and tyre manufacturing industries.

He said there were plans to open automotive training centres in the country and that banks would be encouraged to operate vehicle purchase schemes to enable Nigerians to buy cars with payment in installments, among other things.

But, no sooner had he finished speaking than reactions rippled across the country.

Reactions

While some Nigerians welcomed the initiative and hailed it as timely, others have kicked against it. The latter are largely driven by mutual suspicion of government’s intentions.

In an article published in The PUNCH on December, 2013, Gbugbemi Otumara, like many other Nigerians, wondered why the government was in a hurry to implement the policy. He said, “The policy as enunciated on paper is beautiful, but very presumptive in assuming that it would be translated into reality in a matter of a few months. What was the urgency in truncating an import duty regime three months to the end of the fiscal year? But what could be the intention of the Federal Government in making the new NAP to take immediate effect?”

Some leading car dealers and representatives of foreign automobile manufacturing companies in the country immediately protested against the introduction of the policy at the Senate. The auto firms, comprising Toyota, CFAO, Honda, Mercedes Benz and Coscharis, among others, reportedly urged the Senate Committee on Trade and Investment to ensure the smooth implementation of the policy without giving advantage to any firm at the expense of others.

Led by the chief executive officer of Coscharis Motors, Chief Cosmas Maduka, the dealers noted that though the policy was a good and laudable idea, they were not carried along by the Federal Government.

 “This is about investment. We need to talk to our principals, the Toyota Japan, BMW Munich, KIA motors of Korea and others. We need to carry them along on the new government policy. They will study the policy and tell us they were ready to do it. We need to come up with our own plan. Government said the policy had already started the day after it introduced the policy,” Maduka was quoted as saying.

Also, in an interview with our correspondent, a communications consultant with CFAO Motors Limited, Dr. Oscar Odiboh, notes that the policy has been in the works for many years.

He says that though there have been a lot of discussions on the need to bring about a stable, progressive and futuristic automobile industry that can impact positively on the economy, subsequent governments have failed to implement it.

He says, “True, the government has come up with this policy. But, you see, a policy is always a policy. It is simply paper work. If it is not put on the ground properly, you cannot be too hopeful. You cannot execute your policy if you don’t put certain things in place. First, you must come up with effective strategies.”

He says that the appropriate infrastructure must be in place before any government can hope to execute such a policy successfully.

 “Some of the things that ought to be in place by now are the steel rolling mills. You cannot have an automobile industry that is forever relying on iron sheets, steel and metals to work without a functional rolling mill in this country.

“In addition, there must be good roads for the movement of the automobile parts to the assembly plants. These are the tactical steps that will convince investors to invest in the automobile industry. Unfortunately these things are not just in place. Now what we have is a government that is willing to put down a policy on the table, but it is not ready to put down money to execute it.”

Odiboh insists that the FG must convince Nigerians that it has the political will, the financial muscle and the economic capacity to implement the policy successfully.

“The automobile business is not pounded yam business. It requires huge capital investments and all over the world, governments are always supporting the local manufacturing industry and assembly plants. The Federal Government must put down some money and it must support the industry financially. In the United States, when General Motors wanted to close shop, the government injected money into it because it was a flagship industry in that country and they didn’t want it to die. So if we want to make the automobile industry a flagship industry in Nigeria, the government has to go far beyond merely putting paper on the table,” he says.

The ordinary, hardworking and law abiding folk like Leo Osu, who works with a top flight pharmaceutical company in Lagos, are certainly going to be the worst affected by the new policy when it becomes operational.

Although Osu started working with a leading pharmaceutical company in Lagos about four years ago, he has not been able to save up enough money to buy a car.

“What I need is just a Tokunbo (fairly used car) to move about. But I cannot afford one on my modest salary. Cars are just too expensive nowadays. Lagos crawls with Tokunbo cars, but the prices, for even the brands that are as old as 1994, will scare you,” he says.

Indeed, investigation shows that even the so-called Tokunbo cars, which should be affordable in the first place, are nearly out of the reach of middle income-earners like him.

Still, there is a strong indication that the prices of cars of all ranges may triple any time soon, no thanks to the proposed hike in the tariff for imported vehicles in the country. If this happens, the likes of Osu may have to forget about having a car of their own until they are sufficiently empowered to do so.

Challenges facing the Made-in-Nigeria car project

Investigation shows that ever since the national automotive policy was resuscitated, one question has been engaging the minds of many Nigerians. They have been asking what makes a car an indigenous product.

It is common to find various cars of different makes and ranges cruising along the streets of Abuja, Lagos and other major cities. The truth is that Nigerians are great lovers of cars and they are easily drawn to beautiful and sleek vehicles anytime.

But not many people are willing to bet on the production of a truly Nigerian car, in spite of the claims by some emerging local car assembling companies in the country at present.

“I don’t think we have the local content to sustain a viable car manufacturing industry,” says Osu.

Odiboh notes that one of the toughest challenges facing the made-in-Nigeria car is the lack of indigenous automobile technology.

He says, “You can take a look at a vehicle and tell where it was made. You say this is an American or Japanese car. You know certain automobile products by their origination-countries of origin. So what makes a car an indigenous product? First, the technology has to be indigenous. You have to have your own technology.

“German technology is not the same as Japanese technology. They are completely different and this shows in the kind of cars that they churn out for the world to ride. They have their different technologies. Technology varies from country to country. There is nothing like universal technology. Technology must have its root from somewhere. It is domiciled somewhere. So the technology that will produce the Nigerian car must be indigenous.”

Also, he says that another factor to be considered is the natural mind-set of most Nigerians.

“Now the question is: Do the people in this country think technology? Do they think along that line? Do we have the orientation that can help us produce the kind of vehicle that is our own? If we say so, then the ramshackle and inadequate kind of technology that we have will show in the kind of cars we will produce. If we say we have technology and we say it is sub-standard, then our car will be sub-standard. I dare say we don’t have that kind of technology that is domiciled,” he says.

Drawing from his own experience, Izuogu thinks that government officials are obstacles that local car manufacturers in Nigeria will have to surmount.

He says, “Bad advice from government officials is one of the odds against the made-in-Nigeria vehicle. Car assemblage can never be the same as car manufacturing. You may decide to regard the car assembled in Nigeria as a ‘made-in-Nigeria car’. But is it really a made-in-Nigeria car?”

Although there is an indication that foreign car manufacturers may set up assembly plants in the country, some people still consider electricity as the biggest impediment to the fulfilment of the made-in-Nigeria car dream.

Such thinking is fuelled by recent developments in the power sector. For example, a report published in The PUNCH on January 28 puts the country’s current power generation capacity at 3,674.9 megawatts. The figure falls short of an expected 6.668.6 megawatts, which was projected after the handing over of the successor companies of the Power Holding Company of Nigeria to new investors.

Some people have expressed the opinion that if the power situation remains unchanged, it will be doubtful if car manufacturers willing to set up assembly plants will find it convenient to operate in the country.

Other side of the coin

Interestingly not all Nigerians share Odiboh’s pessimism on the prospects of the made-in-Nigeria vehicle. One such person is an auto industry analyst and chief consultant of Media Advocate Limited, Manny Phillipson.

Describing the current drive towards a viable automobile industry as a laudable one, he says, “Among all the moves initiated by President Goodluck Jonathan, the one I admire most is the National Automotive Policy. This is because it can speed up development without depending on oil. But the move is coming rather too late. Many people are objecting to it out of fear of change.  Nigerians fear change.

“We are too absorbed in the culture of buying and selling to embrace change. But we cannot continue to build our economy on mere trade or buying and selling. We have to start producing things. That is the only way we can create jobs for the unemployed and develop the economy.

“Look at South Africa, for example. That country’s automobile industry is its second largest next to mining. As a matter of fact, most of the cars we drive here are assembled in the country.”

Contrary to general opinion, Phillipson says the absence of infrastructure will not hinder the full implementation of the policy.

He says, “It will be gradually surmountable. We cannot afford to wait till government fixes the lapses. Besides, Rome was not built in a day. No country in the world produces a car 100 per cent. Not even Japan has been able to do that. All the components of a car are sourced from a different market.”

Yet he believes that a wholly Nigerian car built on 100 per cent local content is not achievable.  He says, “There cannot be a wholly Nigerian car. It is not possible because all the components of the car cannot be produced in this country. That is why we need companies that supply automobile parts. This is not to say that some components cannot be sourced locally.

“Ideally we should be able to source rubber, which is used in producing tyres, we can also source materials used in making plastics, dashboards, fabric for seats, to mention but a few. As a matter of fact, up to 40 per cent of the components of the proposed made-in-Nigeria vehicle can be sourced locally. Even car frames or chassis can be designed locally. The same applies to the engine block. But to make use of an existing engine model, you will have to enter a technical agreement with an established manufacturer.

“The whole essence of the made-in-Nigeria car project is to create more jobs and to force down the prices of cars. In the end, the economy will be boosted. The reason why stakeholders are worried is because the automotive policy came too suddenly.”

Return of automobile assembly plants

Just as stakeholders are increasingly getting agitated by the sudden implementation of the National Automotive Policy, the return of local automobile assembly plants in parts of the country indicate that some automobile manufacturing companies are willing to exploit the opportunity offered by Federal Government to their full advantage .

The most prominent among such firms are VON Automobile Nigeria Limited, Proforce Defence Nigeria Limited, Innoson Vehicle Manufacturing Company Limited, Peugeot Automobile Nigeria and the Nigeria Trucks Manufacturing Company.

Operating mainly from an automobile plant owned by the Stallion Group in Lagos, VON Automobile has been assembling Leyland and Hyundai County 40-seater buses for a while now. Lately the company was said to have entered into an agreement with Japanese manufacturers, Nissan, to assemble the latter’s luxury Patrol Sport Utility Vehicle in the country and roll out the finished product before the end of April.

Proforce currently operates a thriving plant that assembles armoured and combat patrol vehicles somewhere in the quiet town of Ode-Remo in Ogun State. The plant is believed to be capable of churning out about 40 armoured vehicles in a month.

Although some of these companies have been described as very productive, it is unlikely that the Completely Knocked Down Components used in assembling their products are sourced locally. Investigation shows that companies like Innoson still depend on engines and frames imported from Japan and China, as well as well as electrical parts from other parts of the world.

Surprisingly most of the assembly plants are still powered by generators. It is clear that they stand the risk of incurring losses unless the FG needs to step up efforts to improve on the current power supply in the country.

However, efforts made by our correspondent to visit some of these facilities, especially the Innoson vehicle assembly plants in Nnewi, Anambra State, to find out – among other things – how they have been coping with this single challenge, hit a brick wall.

 Repeated requests for an interview with the Chairman of Innoson Vehicle Manufaturing Company, Dr. Innocent Chukwuma, were turned down.