The Federal Government on Wednesday defended its auto policy that requires vehicle importers, who do not manufacture locally, to pay 70 per cent duty on imported cars.
The Minister of Industry, Trade, and Investment, Olusegun Aganga, said the policy is necessary to check the activities of importers putting a “strain on our (Nigeria’s) foreign reserves.”
He disclosed that Nigerians spend about $3.4 billion (N544 billion) on importation of used cars and spare parts.
Mr. Aganga, however, said the few local vehicle manufacturing plants in the country would get extra concessions of being allowed to import vehicles at 35 per cent duty.
He stated this while addressing journalists after the weekly Federal Executive Council meeting at the Presidential Villa, Abuja.
The Minister of Information, Labaran Maku, during the briefing, said Council had earlier asked the trade minister to brief it on the new policy, following ‘misleading’ media reports.
“I briefed council today on a misleading article in one of the newspapers yesterday on the auto policy and we thought it necessary to communicate and correct it,” Mr. Aganga said.
“The article has claimed that the duty on used cars is now 70 per cent from yesterday, that is incorrect. It is 35 per cent.
“It has also claimed that all used cars coming into the country will attract a duty of 70 per cent that again is incorrect.”
The minister justified the advantaged levy given to the manufacturers to import at 35 per cent levy.
“Those in the car assembly programme will be able to import cars to meet the gap, when you look at production and the demand in the country. They will be able to import those cars at 35 per cent, not 70 per cent,” he said.
“It is only for those who are putting a strain on our foreign reserves, who have no intention of creating jobs in the country, who want to continue to remain traders that the 70 per cent duty applies to.
“This is to discourage trading, to encourage local assembly, job creation and unnecessary pressure on our foreign reserves. So, it’s an economic issue and deliberately so,” he added.
Mr. Aganga said Nigerians should be “proud of the progress we have made since that policy was introduced in October.”
“If we don’t implement this policy, the pressure on the economy of this country will be unbearable because we rely heavily on the importation of cars and this is not what we want to use your foreign exchange for.
Today, we spend more than $3 billion every year on importing cars, and another $3.2 billion and $3.4 billion importing used cars and spare parts.
“With every importation, we are creating new jobs in other countries. Why should we as a country continue with that policy when we have high level of employment in our country just because we enjoy to ride beautiful cars and yet making sure we are creating unemployment in our country. That is not the best way to go as a country of for the economy of this country. That is why the policy was put in place,” he added .
He noted that local manufacturers of cars would import completely knocked down (CKD) and semi-knocked-down (SKD) parts 1 and 2, at 0, 5 and 10 per cent respectively adding that this brings the blended rate of what they produce locally and what they import to a little above 20 per cent.
Mr. Aganga also dismissed suggestions that the policy would lead to the increase in the prices of vehicles beyond the reach of the country’s average income earners, stating that Nigeria will be the first country out of all the countries that have implemented the auto programme that has refused to ban used cars at the time of implementation because of the interest of the Nigerian people.
The minister further disclosed that local manufacturing and assembling companies and some major car distributors and importers had undertaken not to increase prices.
According to him ” In fact, they issued a press statement yesterday night to reassure the Nigerian people that the newspaper article was put there by some interested groups who wanted to deliberately mislead Nigerians.
“We will publish their names so that anyone who wants to buy cars from any one of them will find out that none of them has increased prices at all.
“We will encourage them to publish the names of their dealers so that any Nigerian who wants to buy cars can go there and buy.”
He also noted that price sensitivity was a critical component of the automotive policy which is aimed at ensuring that cars being produced locally are affordable to Nigerians. He added that his ministry had embarked on a weekly car price monitoring exercise to ensure that the local assemblers live up to their promise.
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