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Interest Rates Disrupted Automobile Industry Plan – Lawmaker

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The Chairman of the House Committee on Industry, Enitan Dolapo-Badru, has said that the high interest rates of Deposit Money Banks disrupted the National Automotive Industry Development Plan 2013.

One of the Nigeria Automotive Industry Plan was to expand the automotive sector by leveraging local resources and increasing the sector’s contribution to the national prosperity.

Speaking during a tour of the Coscharis Automobile Company in Lagos recently, Dolapo Badru noted that the previous National Assembly went all out to push for the policy, but the banks’ interest rates blocked its actualisation.

According to him, the National Assembly also approved N10bn for the National Automotive Design and Development Council but regretted that the banks’ demand for approximately 28 per cent Interest rates from prospective vehicle buyers derailed the policy.

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He explained that the policy, which eventually became an Act, was intended to be achieved in collaboration with the banks before the financial institutions backed out with their huge interest rates.

He proposed a legislative framework to ensure the success of any future automotive campaigns in the country, emphasising that rather than involving banks in such schemes, auto assembly plants should lead the project.

He stated, “That scheme was supposed to work with the banks, but the banks cut it because, on their part, they told the consumers to come and pay 28 per cent or so interest on loans. So, it did not work, but we are currently developing a scheme in which commercial banks are completely excluded.

“You cannot ask someone who is struggling to eat to come and buy a car. You cannot tell me to come and pay 35 per cent interest on N20m, for example. That interest rate alone could cover school fees and feed the family for a year. You cannot add expenses to an individual’s already strained budget.

“The way forward is for assembly plants and the National Assembly to devise a scheme that will encourage the purchase of new products. The buyer can be guaranteed for the next ten years. The scheme must be able to accommodate customers.”

Additionally, Dolapo-Badru hailed Coscharis for taking the bold step of establishing quality assembly plants across the country, creating job opportunities for qualified Nigerians.

The Group Managing Director of Coscharis Group, Josiah Samuel, reiterated the automobile industry’s readiness to address the sector’s existing gaps.

Samuel explained that as soon as the automotive policy was implemented, the company focused on it in the hopes of expanding the sector in Nigeria.

“If there is any policy, or programme to help to engender and improve production, I think we are here to embrace it. So, 10 years ago, we praised the auto policy, and we quickly engaged our partners, we started a Semi Knock-Down plant in one of our factories at Ikeja to enable us to quickly key in, and concurrently as it were, we started working with our partner, Ford Motor Company to build a new factory at our Awoyaya factory.

“There were a whole lot of things in the auto policy that were to help in driving demand because it is a game of numbers. The policy on how to curtail and gradually reduce the importation of used cars is a single-digit finance scheme to incentivise those who want to buy new cars. That was also in place.

“But most of those incentives to help drive auto production locally were all altered, and events overtook them by the amendment to the policy that sort of reduced the levy on import from 35 per cent to 20 per cent, which discouraged local assembly or production.”

Also, the Director of Research and Development, NADDC, Dr Fidelis Achieve, who equally led his team to visit the Coscharis Assembly Plant together with the House members, commended Coscharis on the Assembly Plant that has rolled out different brands and is now delivering the Geely brand.


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