by Wale Salami
Preamble
(Culled from 'Bad Samaritans' by Ha-Joon Chang)
Prado by Toyota
The Issues
On Wednesday 2nd October, 2013, the Federal Executive Council (FEC) approved the National Automotive Policy (NAP) in a bid to stop the importation of fairly used (Tokunboh) cars into Nigeria.
According to the Minister of Trade and Investments, Olusegun Aganga, "in 2012 about $3.4 billion (N550 billion) was spent by Nigerians importing cars while in 2010, the sum of $4.2 billion (N670 billion) was spent, indicating that car import takes the biggest share of the country's foreign reserves followed by other machinery."
Research has it that if Nigeria shuts its doors to 'Tokunbo' (used cars) alone, it will ensure the creation of minimum of 700,000 jobs in the auto industry!
He further explained that the new policy followed nine months of work with input from the National Automotive Council and foreign car manufacturing giants like Toyota and Nissan that are to announce their specific investments in Nigeria soon. Aganga outlined the highpoints of the new policy to include the establishment of three (3) automotive clusters in Lagos/Ogun; Kaduna/Kano; and Anambra/Enugu states to share resources and reduce cost of investments, as well as the development and revival of the petrochemical and metal/steel sectors and the tyre manufacturing industry to support the automotive sector.
Furthermore, appropriate tariff regimes to discourage car imports and encourage local manufacture will be put in place while government will continue taking the lead in patronage of locally made vehicles. If things go as planned, Banks will be encouraged to operate Vehicle Purchase Schemes (VPS) to enable Nigerians purchase cars on easy terms and the FRSC will kick off a new vehicle car registration/tracking system in the next two weeks to check the smuggling of used cars into the country.
My Concerns
Let me start by commending the Federal Government and the Minister of Trade and Investments, Olusegun Aganga, for this BOLD policy intervention. However, more needs to be done in this regard.
Here's my question: 'Is it not time for the FG to kick out ALL foreign car manufacturers (who are importing cars) in Nigeria and provide incentives for INFANT car manufacturers like IVM (Inosson Vehicle Manufacterers based in Nnewi, Anambra state) to GROW to the level of its global competitors like Toyota, Ford, Nissan etal?
History is laden with proven facts that ALL rich countries, without ANY exception, all applied some form of PROTECTIONIST policies to their INFANT industries during their infancy. The economic principles of FREE trade, division of labour and comparative advantage etal only came into existence AFTER these once-protected industries have grown over time and needed no protection again.
The Toyota story shared above is another proof of this perspective.
History has indicted the United Kingdom and United States of hatching the greatest folly about 'globalization' and imposing it (especially) on developing nations. By preaching the gospel that 'There Is No Alternative' to FREE trade is, not only an indictment on the UK and US but, akin to economic crimes. Since its no longer news that there were several forms of 'protectionist' policies from ALL rich nations, so their insistence on neo-liberal principles is a hoax. By adopting anti-free trade policies that prospered them (rich nations) in the past but discouraging developing economies from toeing the same path, it appears the UK & US are 'kicking off the ladder' of prosperity from the rest of the world.
There is no gainsaying that sheer greed and hypocrisy, on the part of the West, and conspiracy of African leaders and elites have further divided our world and dragged us up along dangerous paths. There is no longer nothing UNITED about the United Nations; nothing COMMON about the Commonwealth and nothing UNITING about the Africa Union. The developing economies need a new world-order.
In order to chart a new course and re-write our common history, governments and policy makers in the developing world need to be more proactive and sensitive to the insincerity of the developed economies.
Back To The Point
A brand new jeep locally made in Nnewi by IVM costs N3.5M ($21,875) while its contemporaries made in Europe and America cost almost twice the same amount. So it is not wise for anyone to attempt to import at higher price.
(For more details about IVM, go to http://innosonivm.com/en/About.Asp?ID=1)
IVM6490A Jeep; made in Nigeria
I know many Nigerians will be quick to ask me if 'buying a car from a local car manufacturer is not a huge risk'. Well, so also was it a huge risk some 5 decades ago in Japan! Need I say more to enumerate the impact of what $3.4 billion (N550 billion) - spent on cars by Nigerians in 2012- would have on our economy? Your guess is as good as mine.
A peep into IVM factory
Lastly, I would love to close this essay with an excerpt of the King's Address made by the former British Prime Minister, Robert Walpole, to the UK Parliament in 1721:
'... it is evident that nothing so much contributes to promote public well-being as the exportation of MANUFACTURED goods and the importation of foreign RAW materials'
I hope we can imbibe this common sense. I would rather buy a Made-In-Nigeria IVM car that will keep breaking down than a foreign brand that took over 5-8 decades to perfect.
Let's remember that the best way to achieve the future we want, in Africa and elsewhere, is to create it.
We are the CHANGE that we SEEK; we are the ones we've been WAITING for!
About the AUTHOR
‘Wale Salami is a seasoned international development professional, a community organizer and a highly sought-after speaker.
Reclaiming the Future!
Once upon a time, the leading car maker of a developing country exported its first passenger cars to the US. Up to that day, the little company had only made shoddy products-poor quality items made by richer countries. The car was nothing too sophisticated-just a cheap subcompact (one could have called it ‘four wheels and an ashtray’). But it was a big moment for the country and its exporters felt proud.
Unfortunately, the product failed. Most thought the little car looked lousy and savvy buyers were reluctant to spend serious money on a family car that came from a place where only second-rate products were made. The car had to be withdrawn from the US market.
This disaster led to a major debate among the country’s citizens. Many argued that the company should have stuck its original business of making simple textile machinery. After all, the country’s biggest export item was silk. If the company could not make good cars after 25 years of trying, there was no future for it. The government had given the car maker every opportunity to succeed. It had ensured high profits for it at home through high tariffs and draconian controls on foreign investment in the car industry. Fewer than ten years ago, it even gave public money to save the company from imminent bankruptcy. So, the critics argued, foreign cars should now be let in freely and foreign car makers, who had been kicked out 20 years before, allowed to set up shop again.Others disagreed. They argued that no country had got anywhere without developing ‘serious’ industries like automobile production.They just needed time to make cars that appealed to everyone.
The year was 1958 and the country was, in fact, Japan.
The company was Toyota, and the car was called Toyopet.
Toyotep now Toyota
Toyota: What They Won't Tell You
Toyota started out as a manufacturer of textile machinery (Toyoda Automatic Loom) and moved into car production in 1933.
The Japanese government kicked out General Motors and Ford in 1939 and bailed out Toyota with money from the Central Bank (Bank of Japan) in 1949.
Today, Japanese cars are considered as ‘natural’ as Scottish salmon or French wine, but fewer than 50 years ago, most people, including many Japanese, thought the Japanese car industry simply should not exist.
(Culled from 'Bad Samaritans' by Ha-Joon Chang)
Prado by ToyotaThe Issues
On Wednesday 2nd October, 2013, the Federal Executive Council (FEC) approved the National Automotive Policy (NAP) in a bid to stop the importation of fairly used (Tokunboh) cars into Nigeria.
According to the Minister of Trade and Investments, Olusegun Aganga, "in 2012 about $3.4 billion (N550 billion) was spent by Nigerians importing cars while in 2010, the sum of $4.2 billion (N670 billion) was spent, indicating that car import takes the biggest share of the country's foreign reserves followed by other machinery."
Research has it that if Nigeria shuts its doors to 'Tokunbo' (used cars) alone, it will ensure the creation of minimum of 700,000 jobs in the auto industry!
He further explained that the new policy followed nine months of work with input from the National Automotive Council and foreign car manufacturing giants like Toyota and Nissan that are to announce their specific investments in Nigeria soon. Aganga outlined the highpoints of the new policy to include the establishment of three (3) automotive clusters in Lagos/Ogun; Kaduna/Kano; and Anambra/Enugu states to share resources and reduce cost of investments, as well as the development and revival of the petrochemical and metal/steel sectors and the tyre manufacturing industry to support the automotive sector.
Furthermore, appropriate tariff regimes to discourage car imports and encourage local manufacture will be put in place while government will continue taking the lead in patronage of locally made vehicles. If things go as planned, Banks will be encouraged to operate Vehicle Purchase Schemes (VPS) to enable Nigerians purchase cars on easy terms and the FRSC will kick off a new vehicle car registration/tracking system in the next two weeks to check the smuggling of used cars into the country.
My Concerns
Let me start by commending the Federal Government and the Minister of Trade and Investments, Olusegun Aganga, for this BOLD policy intervention. However, more needs to be done in this regard.
Here's my question: 'Is it not time for the FG to kick out ALL foreign car manufacturers (who are importing cars) in Nigeria and provide incentives for INFANT car manufacturers like IVM (Inosson Vehicle Manufacterers based in Nnewi, Anambra state) to GROW to the level of its global competitors like Toyota, Ford, Nissan etal?
History is laden with proven facts that ALL rich countries, without ANY exception, all applied some form of PROTECTIONIST policies to their INFANT industries during their infancy. The economic principles of FREE trade, division of labour and comparative advantage etal only came into existence AFTER these once-protected industries have grown over time and needed no protection again.
The Toyota story shared above is another proof of this perspective.
History has indicted the United Kingdom and United States of hatching the greatest folly about 'globalization' and imposing it (especially) on developing nations. By preaching the gospel that 'There Is No Alternative' to FREE trade is, not only an indictment on the UK and US but, akin to economic crimes. Since its no longer news that there were several forms of 'protectionist' policies from ALL rich nations, so their insistence on neo-liberal principles is a hoax. By adopting anti-free trade policies that prospered them (rich nations) in the past but discouraging developing economies from toeing the same path, it appears the UK & US are 'kicking off the ladder' of prosperity from the rest of the world.
There is no gainsaying that sheer greed and hypocrisy, on the part of the West, and conspiracy of African leaders and elites have further divided our world and dragged us up along dangerous paths. There is no longer nothing UNITED about the United Nations; nothing COMMON about the Commonwealth and nothing UNITING about the Africa Union. The developing economies need a new world-order.
In order to chart a new course and re-write our common history, governments and policy makers in the developing world need to be more proactive and sensitive to the insincerity of the developed economies.
Back To The Point
A brand new jeep locally made in Nnewi by IVM costs N3.5M ($21,875) while its contemporaries made in Europe and America cost almost twice the same amount. So it is not wise for anyone to attempt to import at higher price.
(For more details about IVM, go to http://innosonivm.com/en/About.Asp?ID=1)
IVM6490A Jeep; made in NigeriaI know many Nigerians will be quick to ask me if 'buying a car from a local car manufacturer is not a huge risk'. Well, so also was it a huge risk some 5 decades ago in Japan! Need I say more to enumerate the impact of what $3.4 billion (N550 billion) - spent on cars by Nigerians in 2012- would have on our economy? Your guess is as good as mine.
A peep into IVM factoryLastly, I would love to close this essay with an excerpt of the King's Address made by the former British Prime Minister, Robert Walpole, to the UK Parliament in 1721:
'... it is evident that nothing so much contributes to promote public well-being as the exportation of MANUFACTURED goods and the importation of foreign RAW materials'
I hope we can imbibe this common sense. I would rather buy a Made-In-Nigeria IVM car that will keep breaking down than a foreign brand that took over 5-8 decades to perfect.
Let's remember that the best way to achieve the future we want, in Africa and elsewhere, is to create it.
We are the CHANGE that we SEEK; we are the ones we've been WAITING for!
About the AUTHOR
‘Wale Salami is a seasoned international development professional, a community organizer and a highly sought-after speaker.
Reclaiming the Future!
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