The auto industry was recently hit by a new auto policy, which will raise import duties on automobiles by 50 per cent to discourage inflow of used cars. Focus will also shift to locally produced cars. Obviously, this policy, which takes off early this year, will face serious challenges. This ill-timed, ill-thought and rushed policy is flawed and will have far-reaching consequences, not only for rattled auto dealers but also for prospective car owners. The immediate fallout of the new automotive policy is that car buyers in Nigeria will be paying more for used cars.
One of the advantages that the policy boasts of is that it would create employment. This advantage can easily be faulted, as the stipulated time frame is not enough to get skilled local hands. To get the policy up and running, especially within the short span, foreign hands will have to be employed which in the first instance defeats the entire purpose of creating jobs and reducing unemployment.
It is imperative to ask if the Nigerian socio-economic climate is indeed ready for such a drastic move. There are lots of issues that need to be sorted before the auto policy is effective, such as the epileptic power supply, inadequate water supply, basic infrastructure and some other daunting challenges that business owners battle with daily.
Due to the haste in implementing this policy, Nigerians currently working in the automobile sector may soon be out of jobs. High import tariffs would require employers to save costs and the most logical way would be a significant reduction in staff strength. That smuggling will become the order of the day is simply stating the obvious. Bribery and corruption at the borders will increase.
Frankly, the automotive industry is not ready for such a drastic step. Though the policy might seem to help the economy in the long run, there is no clear plan for the sustainable execution, especially in the short run. For a policy with critical implications and credibility issues, the federal government needs to be more transparent, fair, consistent and free from vested interests in growing the economy.
Ejike Nnaka,
Abuja, FCT
