It is too early for Nigeria to be an automobile manufacturing hub for West Africa. And this is neither about the country’s over 160 million people nor its strategic position in the sub-region.
Firstly, the automobile industry requires huge supply of power to work. Secondly, it needs flat steel sheets with which vehicle bodies are built. Nigeria has neither. Finally, “countries with a highly unequal income distribution (high Gini coefficients) tend to have fewer cars per capita,” according to Uri Dadush and Shimelse Ali in a recent report In Search of the Global Middle Class: A New Index.
Power supply in Nigeria is not only inadequate but also epileptic. Our steel industry is lame duck. Were it even working, it is not designed to manufacture flat sheets.
The point has also been made that the country does not have the market to sustain automobile manufacturing. Nigeria buys only 70,000 new cars and 350,000 used cars annually.
But it is not impossible to join the automobile manufacturing club if these gaps are closed. Meanwhile, there is an opportunity at bottom of the pyramid of car manufacturing. The proposal of the 2013 Budget to remove the 5 percent duty on completely knocked down (CKD) components for mass transit buses of at least 40-seater capacity is an opportunity for more Bus Rapid Transits (BRTs) through public-private partnerships.
Thankfully, Lagos State, the pioneer of BRT in Africa, has a template that others can copy. South Africa and Uganda have already duplicated this model. If properly done, it could spur a low technology industry in the assembly, manufacture, sale and repair of bus parts. Vocational schools, using apprenticeship system, can also provide jobs for technicians, alongside mechanics and motor spare parts dealers.
Nigeria could become a net exporter of buses to West African countries that are considering BRT. We must, however, take our time. It is not something we should do in a hurry. As Nigeria builds expertise and markets, it must also draw from the South Korea experience.
South Korea’s automotive industry is currently the fifth-largest in the world, measured by automobile unit production, and the sixth-largest by automobile export volume. It started with mere assembling of parts like Nigeria did. These were parts imported from Japan and the United States.
Today, Korea is among the most advanced automobile-producing countries in the world. Annual domestic output first exceeded one million units in 1988. In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signalling its coming of age.
In 1990, for instance, Hyundai’s cumulative exports to the US exceeded one million. So what do we do? Work on power and make it work. If power works, the steel industry will work, manufacturing industry in general will work, Nigeria’s bulging middle class will be larger and stronger, with the purchasing power that will boost car purchases. In short, the economy may just attain the double digits that are being projected.
The Korean automobile industry also grew by leveraging on strategic alliances. We can do same and insist on technology transfer.