Seyi Onajide, who qualified as a Chartered Accountant in 1989, is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). Through hard work and dedication to service, he has achieved many firsts and laurels.
Currently, the Group Managing Director/CEO of R.T. Briscoe Plc, he was recognised recently by Nigeria Auto Journalists as Auto Personality of the Year and spoke on the auto policy and how to make it work, among other industry issues
What are the challenges facing Nigeria’s auto industry currently, and how are you navigating through the situation?
The challenges facing the auto industry in Nigeria today actually started in 2014 when the then Minister of Industry, Trade and Investment, Olusegun Aganga, came up with a new auto policy. At that time, the auto industry just came up with some innovations making it possible for the middle class and high net-worth individuals to buy new vehicles instead of used or Tokunbo vehicles. In most other economies of the world, people don’t buy vehicles ‘cash down’; there is always a credit system that drives the industry. That was what we started then – allowing the banks to guarantee the purchase of new cars by their customers. But the minister came with the auto policy to disrupt it.
Was the policy not meant to encourage the assembling of new vehicles in Nigeria?
That was the plan, and I have no objection to that. As a matter of fact, we would need to get to that level. What I have a problem with is the way they went about it. You do not do such a thing with a military fiat. There are procedures to achieve that. The simple truth is that we’re not ready for that yet. I can go and get a licence to assemble cars; import them, and remove the tyres, alternators, steering wheel and other parts. Ship them back home and make them look like SKDs. Who are you deceiving? Having an assembly is a chain reaction whereby companies who produce components of the vehicles are also engaged. But every component has to be sourced abroad, then what happens is that the vehicle becomes very expensive because after the vehicles are fully built, they will then be knocked down for you to reassemble them here.
Are you saying key stakeholders like you were never involved in the whole process?
At the time we were brought in, decisions had already been taken, and their mind was made up on the direction of the policy. In fairness to Minister Aganga, he said he contacted some stakeholders. And they didn’t deny it. What I saw then was that the few people contacted saw it as a privilege to strategically position themselves and have an advantage over others. Selfish interest was placed above the interest of the industry and the nation. It was when the policy document came out, and they were left out that they started crying foul.
This thing follows a process. For instance, Toyota at a time was producing from Japan; later it decided to have an assembly plant in other regions. As a matter of fact, Toyota only gives out the concept, while the assembly plants locally source for components. South Africa produces for the African market because they have enough local component suppliers. I guess that was what Aganga saw – that if South Africa is producing cars, why not Nigeria too? It is a good idea; nobody is contesting that. But do we have the local content suppliers? Dunlop and Michelin that should have been our suppliers of tyres, have moved out of Nigeria to neighbouring Ghana. A radiator company that used to be in Port Harcourt has gone under. We used to produce windscreens in Ibadan back then, the same thing with the Exide battery.
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What should be done to revive the industry?
The local content suppliers must be in place first before you now talk of having car assembly plants. If they are not on the ground, then we are just deceiving ourselves. We need to learn from our past mistakes, and that was what we told Aganga back then in 2014 when he came up with the auto policy. But he wouldn’t listen. He went ahead to implement the increase in tariff for new vehicles, and everything went up. New vehicles went out of the reach of the average Nigerian. Where are the assembling plants now? The Tokunbo we were trying to avoid then has become the only alternative for Nigerians.
Was the high tariff on FBU not meant to allow local assemblers to thrive?
It doesn’t work like that. If it does, then we should have had more assembly plants working today. It is not working; we still depend on auto manufacturers abroad for everything. We met with them (automakers), and they told us clearly that they could not stop their production line because of Nigeria. How many units do you buy? Their assembly plant is automated. To satisfy Nigeria, after completing the entire production, they will need to get another labour to start dismantling some parts to make it CKD or SKD. They will remove some parts and put them in another container. But if the whole vehicle is coming as a whole, you will pay the same freight rate. To remove some parts, you spend more on labour, more money to package them and additional money for the freight to Nigeria. At the end of the day, the car becomes more expensive. The duty concession may not cover the shortfall. Therefore, many simply opt for the option of bringing in FBU, with less stress and more gain.
What should be done to bring back those local content suppliers?
All those companies came in the first place because they saw an opportunity in the country for thriving business. But when they came, they were not protected, so they had to leave. They came trying to meet standards, but others started making substandard products and nobody checked that. How would they compete? They are ready to come back if the environment is healthy and competition is fair to all. There are government agencies in charge of monitoring and ensuring orderliness in the business environment. What are they all doing? The law that we should make is to address those anomalies.
Looking back in the 1970s and 1980s, Nigeria had a thriving auto industry with key local players. What went wrong that made all the plants to collapse?
I believe there was no sufficient protection for the pioneer assembly plants. Nigeria’s average tariff was the lowest among all countries that adopted the automotive policy as a strategy to develop their industry at the time, the most emerging economies did. The adoption of free trade policy by Nigeria in the early eighties without the need to protect the critical industrial sectors finally undermined the industry.
The lack of integrated plans to develop local content was one of the reasons for the failure of the automotive industry in the past. Back in the 1970s, we had Peugeot Automobile Nigeria, Kaduna; Volkswagen Nigeria, Lagos; Anambra Motor Manufacturing Company (ANAMCO), Enugu; Styer Nigeria, Bauchi; National Truck Manufacturer, Kano; and Leyland Nigeria, Ibadan. These companies were, however privatized in 2007. But the assembly plants could not survive the harsh economic environment, orchestrated by many factors, so they collapsed. -First published in Nigeria Auto Journal.
