Post by Ismail AbdulAzeez on Feb 23, 2021 14:57:02 GMT 1
Nigerian Motor Manufacturers Foresee Job Losses Due To 5% Import Levy
The Federal Government of Nigeria (FGN) has been promoting the rapid development of the indigenous manufacturing industries, but motor manufacturers in the country are finding it difficult to understand why the government reduced vehicle import duty to 5%.
On January, 6th 2021, the West African Tax Leader at PricewaterHouseCoopers, Taiwo Oyedele, tweeted about some sections of the Finance Act 2020 on the social media platform.
You can recall that The Finance Act 2020 was signed into law on 31st December, 2020 by the president of the Federal Republic of Nigeria, Muhammadu Buhari, and it came to effect on the 1st of January, 2021.
He tweeted that the new law introduced more than 80 changes to 14 different laws that will affect different stakeholders in the economy.
He stated that import duty on tractors had been reduced from 35% to 5%. Mass transit vehicles and trucks had theirs reduced from 35% to 10%. While the import duty on cars was reduced from 30% to 5%.
This caused the Executive Director, Nigeria Automobile Manufacturers Association, Remi Olaofe to complain that the new policy was not favourable to local vehicle assemblers.
The Executive Director lamented that the government has embarked on a suicide mission for the local auto assemblers. He was wondering why the government should drastically reduce the duties on vehicles imported into the country at the expense of those assembling them in Nigeria.
He said that to send a car into Nigeria is not a difficult task, the importer just needs to buy the car abroad and bring it into the country and display it in their showroom.
The assembling process is quite different and far more complex than the outright importation of finished vehicles. There are a lot of values that are added in the assembling process.
A lot of people are employed in the process of assembling vehicles. This action will force most of them out of jobs.
He lamented that the industry operatives have put a lot of things in place to revive the automobile industry. They have already started making car seats in Kaduna State, tie rods and even batteries. All these will be lost because of the recent act.
When their vehicles cannot compete favorably with imported ones, those employed in the value chain will have to lose their jobs, he lamented.
The Executive Director of the Association gave details of the auto assemblers in the country; he said that over 65 companies have been licensed to assemble cars in Nigeria by the National Automotive Design and Development Council.
He worried that if the industry is not protected from unfavorable competition, the plants will have no alternative than to shut down. They will now move back to importation, and this is not good for the growth of the economy.
Over $1bn investment has gone into the industry. He lamented that between 6,000 and 10,000 skilled workers may be forced into the labour market.
The labour in that industry is highly skilled, many of them have been sent abroad for training, and this policy will worsen the situation of the growing industry.
From the government’s perspective, their reason for the reduction was to make more means of transportation available in the country. They claimed that it will help to move more people around and not the negation of the automobile industry policy directed at localizing the production of local vehicles.
The Vice President of Nigeria, said that the annual demand of cars in Nigeria is currently about 720,000 against the actual local production of about 14,000. At this level, he said that the country will not realize the national need.
The VP also restated that this huge shortfall will mean higher price of vehicles and greater stress on other sectors of the economy that depend on transportation at this time of national emergency with rising food prices and transport costs.
This forum believes that a balance needs to be reached between both parties as the local industry needs to be protected, and at the same time, the government will not allow too much suffering on the poor of the country.
The Federal Government of Nigeria (FGN) has been promoting the rapid development of the indigenous manufacturing industries, but motor manufacturers in the country are finding it difficult to understand why the government reduced vehicle import duty to 5%.
On January, 6th 2021, the West African Tax Leader at PricewaterHouseCoopers, Taiwo Oyedele, tweeted about some sections of the Finance Act 2020 on the social media platform.
You can recall that The Finance Act 2020 was signed into law on 31st December, 2020 by the president of the Federal Republic of Nigeria, Muhammadu Buhari, and it came to effect on the 1st of January, 2021.
He tweeted that the new law introduced more than 80 changes to 14 different laws that will affect different stakeholders in the economy.
He stated that import duty on tractors had been reduced from 35% to 5%. Mass transit vehicles and trucks had theirs reduced from 35% to 10%. While the import duty on cars was reduced from 30% to 5%.
This caused the Executive Director, Nigeria Automobile Manufacturers Association, Remi Olaofe to complain that the new policy was not favourable to local vehicle assemblers.
The Executive Director lamented that the government has embarked on a suicide mission for the local auto assemblers. He was wondering why the government should drastically reduce the duties on vehicles imported into the country at the expense of those assembling them in Nigeria.
He said that to send a car into Nigeria is not a difficult task, the importer just needs to buy the car abroad and bring it into the country and display it in their showroom.
The assembling process is quite different and far more complex than the outright importation of finished vehicles. There are a lot of values that are added in the assembling process.
A lot of people are employed in the process of assembling vehicles. This action will force most of them out of jobs.
He lamented that the industry operatives have put a lot of things in place to revive the automobile industry. They have already started making car seats in Kaduna State, tie rods and even batteries. All these will be lost because of the recent act.
When their vehicles cannot compete favorably with imported ones, those employed in the value chain will have to lose their jobs, he lamented.
The Executive Director of the Association gave details of the auto assemblers in the country; he said that over 65 companies have been licensed to assemble cars in Nigeria by the National Automotive Design and Development Council.
He worried that if the industry is not protected from unfavorable competition, the plants will have no alternative than to shut down. They will now move back to importation, and this is not good for the growth of the economy.
Over $1bn investment has gone into the industry. He lamented that between 6,000 and 10,000 skilled workers may be forced into the labour market.
The labour in that industry is highly skilled, many of them have been sent abroad for training, and this policy will worsen the situation of the growing industry.
From the government’s perspective, their reason for the reduction was to make more means of transportation available in the country. They claimed that it will help to move more people around and not the negation of the automobile industry policy directed at localizing the production of local vehicles.
The Vice President of Nigeria, said that the annual demand of cars in Nigeria is currently about 720,000 against the actual local production of about 14,000. At this level, he said that the country will not realize the national need.
The VP also restated that this huge shortfall will mean higher price of vehicles and greater stress on other sectors of the economy that depend on transportation at this time of national emergency with rising food prices and transport costs.
This forum believes that a balance needs to be reached between both parties as the local industry needs to be protected, and at the same time, the government will not allow too much suffering on the poor of the country.