Govt to unveil vehicle financing scheme
The Federal Government is formulating a new Vehicle Refinancing Scheme that will enable Nigerians buy cars and other locally manufactured vehicles at affordable rates, Minister of Industry, Trade and Investment, Olusegun Aganga said yesterday.
He said the scheme which is expected to be launched in about four months, would allow Nigerians to buy vehicles of their choice and pay for them over a period of four years, adding that government is in discussion with both local and international banks to set aside a vehicle refinancing fund that Nigerians can access at not more than 10 per cent interest per annum.
“Buying cars and paying cash is not the best,” he said, adding that finances will be available at low interest rate.”
Aganga said to ensure that the auto policy succeeds and that local car manufacturers keep afloat, the Federal Government has crafted a policy that will ensure that local car manufacturing plants would be given priority in purchase of vehicles for official uses, stating that it is another way of creating demand for made-in-Nigerian cars.
The minister explained that reports in some quarters that the policy would lead to the exit of used cars was unfounded, saying that was not the case.
“I want to reassure Nigerians that we have not banned used cars, so anywhere you hear used cars have been banned, it is not true.” He said reports that put tariff on used cars at 70 per cent, is not true, “used cars are 35 per cent,” he stressed.
He said under the new auto policy, there are multiple tariff regimes, stating that it would not be entirely correct to even say that new vehicles would attract 70 per cent tariff. He said for those who import CKDs (Completely Knocked Down vehicles), the duty is zero per cent, while those who import SKD1 (Semi Knocked Down) and SKD2, it is five and 10 per cent respectively.
Aganga said those who are committed to implementing the auto policy, and have acquired land, and have brought in machinery and have assembly plants in place, would import the gap between demand and local production, adding that they can import at the maximum rate of 35 per cent. He said the 70 per cent tariff applies to those with no visible commitment to the new auto policy.
The auto sector accounts for nine jobs globally, and five per cent of manufacturing and the jobs come from the production of vehicle parts. This is why we should not miss this opportunity, he warned.
He said Nigeria spends on the average, $3billion to import new cars and another $3.7billion to import fairly used cars and parts. That number in likely to grow and will grow if we do nothing significantly and that will lead to structural adjustments in our economy as a whole.
It is for this reason that most countries in the world have auto policies, lamenting that until now, it’s only Nigeria and Bangladesh that do not have auto policies.
He said Nigeria cannot afford to be neutral on the issue because it is a big employer of labour. He said the auto sector accounts for about nine million jobs globally and accounts for five per cent of manufacturing.
The Managing Director of Peugeot Automobile of Nigeria, Ibrahim Boyi, the Director-General, National Automative Policy and Yomi Idowu of Leyland, were present at the briefing.
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