It is a truism that all sectors must work optimally to maintain a healthy economy for a nation, avert job losses and put the country on the path of industrial growth.
Similarly, there must be appropriate policies crafted by the government to fertilize the seeds of development and ensure the economy does not go south.
A member of the House of Representatives, Saheed Akinjide Fijabi, puts the matter succinctly while moving a motion last week. The lawmaker noted that industrial growth contributes to a nation’s development in terms of increased foreign earnings, job creation and achieving other macro-economic objectives.
According to him, most developed countries depend on industrial development to revolutionize their economic powers through manufacturing of goods for local consumption and exportation of same to other countries as a booster to their foreign trade earnings.
His motion sought to keep the automotive sector’s engine running by injecting financial and bailout assistance into the automobile industry in Nigeria,
It was not a coincidence that there were efforts from two different directions on the issue: from the floor of the Green Chamber and from the House Committee on Industry.
It seemed like a sudden awakening to lubricate the weakening engine of the country’s automotive sector.
Prior to the motion, on the 9th October, 2016, the Hon. Abubakar Hussaini Moriki -headed House Committee on Industry had embarked on an oversight tour of the automotive industry starting from Innoson Vehicle Manufacturing Company in Enugu and Anambra states, to Lagos and Kaduna states. The committee went on an intensive tour that took its members to ANNAMCO, Afro- Asia, Union Auto-parts, VON Automobiles Nigeria Ltd, Dana Motors Ltd, PAN Nigeria Ltd and National Trucks Manufacturers amongst other companies.
The purpose of the oversight visits, no doubt, was to have first hand information on the state of things in the automotive industry which has been plagued recently by a myriad of woes
Giving his reasons for the comprehensive tour of the sector, the lawmaker said they wanted to see for themselves the situation in the automotive sector.
Speaking about Innoson, he said “This company is one of the companies facilitated, assisted and collaborated with the National Automotive Design and Development Council, a regulatory council, a parastatal established by the Federal Government of Nigeria.”
The parastatal is under the purview of the committee on industry, so, is the Bank of Industry which to a large extent has helped in providing lifelines.
Moriki was excited at what the committee saw as they went around the country, especially looking at the prospects of the sector, but he was saddened as well by the daunting challenges.
He was happy that Innoson especially, is 90 percent owned by Nigerians and that the company employs about 7000 Nigerians. He saw the possibility of expansion in the company. But at the same time, the restrictions and profound problems and in numerous challenges plaguing the sector was immediately evident.
There was lack of funds to even meet the smallest threshold of production, especially foreign exchange. Where $3 million per month was required, only 200, 000 dollars was available. There is also the usual problem of power.
Unfortunately, this is a problem that is widespread around the country, not only in the automotive industry, but across all facets of national production. Everywhere the committee went, they met the same song; harsh economic conditions that stifle growth and dwindle production.
The committee chairman, who described what he saw at Innoson as “extra-ordinary, impressive,” and “something to be proud of as a Nigerian,” also admitted that “the country is going through a recession and there is scarcity of dollars and that Innoson with 7000 employees is facing an acute dearth of foreign exchange,” which, he noted, may not allow it to continue its production unimpeded.
The truth of the matter is that if the negative trend continues, Moriki’s joy in Innoson and other automotive companies may be short-lived.
Fijabi’s argument on the 20th of October puts the situation succinctly: “Nigeria had a breakthrough into automobile manufacturing industries with the commissioning of Innoson motors, being her first indigenous vehicle manufacturing company in year 2010 to cut down the country’s dependence on importation of vehicles.”
“Investigation revealed that Innoson Motors, known for importation of basic motor components, including engines, from abroad and assemble them locally, is shutting down business due to foreign exchange issues borne out of economic recession.
“If this company is allowed to shut down, while government folds its arms, it will have negative effect on our economy in the area of job loss, loss of local and foreign revenue.”
This is where the intervention of the Abubakar Hussaini- Moriki-headed House of Representatives Committee on Industry is a welcome development. If the jobs of the 7000 workers in Innoson for instance are threatened because of acute shortage of foreign exchange, it is obvious that others are facing the same situation across the country.
A bailout in this regards, may not be out of place. The committee should quickly make its reports and findings of the oversight tours available to the House in order to help the legislature chart a new path for the automotive sector.
It may also be necessary for the committee to liaise with the relevant ministry to tweak the Nigerian Automotive Industry Development Plan (NAIDP) for better financial incentives in the coming fiscal years.
By so doing, this would not only attract new investors in the sector, it would also help create a more enabling environment for existing assembly plants as well.
It would also be a good thing for the adhoc committee, set up by the Green Chamber, to interact with relevant stakeholders in the sector to address the problems faced by the industry.
Optimists say the report of the committee might provide a soothing elixir for an already troubled sector.
