Nigeria to Kickstart Local Manufacturing of Auto Parts

The Federal Government of Nigeria has announced plans to commence the local manufacturing and supply of tyres, batteries, brake pads, and other automobile components, in a bid to invigorate the domestic automotive industry and reduce dependency on imports. This policy aims to boost the supply of locally made auto parts to the market by 40%.

This initiative was unveiled by the Minister of Industry, Trade and Investment, Doris Aniete, during a ministerial sectoral briefing held to mark President Bola Tinubu’s first year in office. Speaking on Tuesday in Abuja, Aniete highlighted the collaborative efforts with manufacturers, dealers, regulatory bodies, and other stakeholders in the automobile ecosystem as central to this ambitious plan.

For years, Nigeria’s automotive industry has heavily relied on imports to meet local demands for vehicles and spare parts. Luqman Mamudu, Chairman of the West Africa Automotive Show, recently noted that Nigeria accounts for about 78.8% of automotive components imported into West Africa, spending approximately $4.2bn annually out of a regional total of $6.2bn.

Addressing the briefing, Minister Aniete stressed the importance of the newly developed framework, which will prioritize collaboration among various players in the industry to overcome challenges and unlock investment potential. “Steps are being taken to unlock the potential opportunities inherent in the nation’s automotive sector,” Aniete stated. “In collaboration with the National Automotive Design and Development Council, the strategy is to ensure the Nigerian automotive industry supplies 40% of its components locally, including glass, tyres, batteries, brake pads, foam and seats, exhaust systems, and electric cables.”

Aniete further explained that the frameworks developed emphasize the need for cooperation among manufacturers, dealers, and regulatory bodies. “This collaborative approach will address challenges, streamline processes, and drive innovation. The automotive industry is set to sign off-take agreements amongst themselves, marking a historic beginning for Nigeria.”

Highlighting the benefits of local production, she said, “With the MOUs and agreements in place, suppliers will be assured that car assemblers and manufacturers will purchase their products. This guarantees the supply chain, quality, and standards, allowing consumers to buy affordable, brand-new cars. This is how import substitution works. We don’t need to use our FX to buy things we can produce locally.”

In another significant development, Aniete announced that the government has attracted $3.5bn to rejuvenate the Nigerian Cotton, Textile, and Apparel Industry. This investment aims to optimize the performance of the sector, which has strong growth potential due to the availability of cotton and Nigeria’s large market of over 200 million people. “The textile and apparel industry is a top contributor to the manufacturing sector, with vast potential for employment creation and attracting foreign direct investment,” she added.

The minister also reported a notable increase in revenue from the Lagos International Trade Fair Complex, which saw earnings rise to 430 million naira in the first quarter of 2024, compared to just 17 million naira in 2023. Plans are underway to host the Lagos International Trade Fair, last held in 2010, signaling a commitment to reestablish Nigeria as a regional market hub.

Aniete emphasized that the revival of the trade fair will not only reaffirm Nigeria’s status as a market powerhouse in West Africa but also enhance market linkages for manufacturers, suppliers, farmers, and traders. This revitalization is expected to boost economic activities across sectors and create job opportunities while strengthening food security.

In addition, transformative reforms at the Nigerian Commodity Exchange are set to provide equitable opportunities for farmers and miners. These reforms, alongside strategic bilateral engagements with countries like Qatar, the UK, India, and the UAE, aim to bolster Nigeria’s market access and trade prospects.

To expedite export processes and reduce rejections, the government plans to establish one-stop export processing centres across geopolitical zones, ensuring streamlined operations and adherence to stringent regulations. These measures are designed to safeguard Nigeria’s natural resources while strengthening its currency and economy