Global push for a climate-friendly vehicle has stimulated Nigerian traditional oil buyers to set target dates for electric vehicles. In this interview with HARRISON EDEH of BusinessDay, Luqman Mamudu, a former director of Policy and Planning at the National Automotive Design and Development Council and Managing Partners Transtech Industrial said Nigeria must move with the global shift on Electric vehicle revolution. Excerpts:
Can you share your thoughts on the readiness of the Nigerian market to an Electric-made vehicle?
There are already Electric cars in Nigeria imported by individual enthusiasts but nothing significant. Public awareness is still quite low. The general impression is that Nigeria’s extremely low electricity generating capacity is inadequate to sustain these categories of emerging vehicles. I read the other day that the National Assembly threw out a bill proposing EV adoption in Nigeria on grounds that it will limit market for our petroleum sector.
The fact on ground is that the EV adoption is growing like wildfire globally. I understand that in Norway 50% of vehicle fleet are now electric. Some Countries like India, China the UK and others have set dates, some as early as 2025 to phase out vehicles utilising fossil fuels. Aside from Automobile companies like tesla established purely to drive the EV technology, most OEMs like GM, BMW. Mercedes etc have invested heavily in EV technologies and have equally set out dates to phase out the Internal Combustion Engines from their production lines. So don’t be surprised if you find that they will dump their inventories of unsold IC vehicles and produce limited number for dumping in Nigeria and other countries reluctant to adopt.
I believe very strongly that Nigeria, like the rest of the world deserve to Drive EV because this is the present and future. Even Biden, the current president of America has a very big budget to completely make United States vehicle fleet electric. Nigeria is a signatory to the Kiyoto protocols and others to reduce carbon footprint world wide for a better environment. The critical issue is to work out how best to gradually adopt it.
There’re concerns about Nigeria having the capacity to drive this policy initiative on the back of our poor power supply: what’s your perspective on this?
The argument that we do not generate enough electricity for its adoption is only true in the short-run because as people embrace it, charging stations will spring up everywhere. Some of them will generate their own power from varied sources including solar which is abundant here. So, its big business. Charging systems technologies are advancing so rapidly now that you can get a full charge in very limited time and this can take you for 100s of kilometers.
How do we tweak our auto-policy to incentivize and drive initiatives such as this?
This is a good question. The automotive industry is capital intensive and long term investment. As long as we fail to see this, we can never grow a true automotive industry. Look at what is going on now. The 10-year Nigeria automotive development programme is now truncated 6 years into its scheduled first phase.
The arguments put forth by certain individuals who simply want to import all manner of everything, including secondhand pants is that the Assemblers including Nissan, Ford, Kia, Sinotrucketc are mere Assembly plants that bring components and parts or Semi Knocked down (SKD) to assemble in Nigeria. I wonder if the SKD concept was invented by Nigeria.
What does this policy initiative mean for a country hugely dependent on hydrocarbon since many EU countries have already given targets to switch over to climate-friendly model such as electric cars?
The truth is that it is not! It’s a strategy adopted by any nation that aspires to grow its automotive industry. It usually take about 10 years gestation period for SKD assemblers to gain critical volume to enable them move up to the next stage which is Completely knocked down operations were they now install Body Shop and paint shop both extremely expensive.
No investor will attempt it under a hostile and unpredictable policy environment. What most people don’t know is that the Global OEMs don’t like SKD operations because it a headache for them with hardly any profit margin. They only hope to recoup through sales of components and parts going forward.
This is why incentive and protective and investment assurance measures are put in place to encourage them. This is exactly what the NAIDP is structured to do but enemies of this country have misguided government to suspend the policy. I hear them say they want to rejig because the policy is not working. Global investors are very sensitive to this kind of reckless policy posturing.
By the time you realise your mistake and try to call them back, they will not come. Before the policy in 2013 import duty on cars was a maximum of 35percent and 10percent for commercial vehicles.
This was not attractive to investors so they refused to come. The moment NAIDP was launched in 2014 with commercial vehicles at 35percent and Passenger cars at an additional levy of 35percent, Investors gradually flowed in through partnership with Nigerian Entrepreneurs.
All the major global assemblers are now here representing a pipeline for investment inflow but we suddenly cut this inflow window. These protective tariff lines were programed to be gradually removed and replaced by other incentives as the industry consolidates but we have shut it down.
It’s like given a dog a bad name in order to hang it. In its six years of implementation, government has failed to implement so many of the elements of the program apart from crippling bureaucracy at NADDC, FMF and Customs. The NAIDP deliberately did not place levy on imported used cars to avoid public mobilization against it but government was supposed to set up a fund so Nigerians, especially haulage companies And bus operators can acquire vehicles at low interest rates and pay over a comfortable period.
Before I left service at NADDC in 2017, we had perfected a commercial and financial model, go-to-market strategy and even a provisional license from CBN but this process was suddenly halted. What we hear every day is that it is about to be launched 5 years after! This was supposed to guarantee market for the assemblers to quickly deepen their local content. NADDC also spent nearly a N100m on an electronic platform to curtail smuggling in partnership with Nigerian Customs.
This platform is gathering dust as I speak that is if they still have it. All we do is to complain that the sector is not doing well. The Bureau for Public Enterprise graciously invited me to be part of a committee to review the Nigeria automotive policy in 2020, just as an interim report was submitted this year, the Ministry of finance cancelled the policy vide section 38 of the 2020 Finance act without consultation with Tariff review Board of Nigeria nor bureau For Public Enterprise (BPE) whose privatized companies are undermined.
The unfortunate situation is that companies like Peugeot Automobile of Nigeria, Innoson Vehicle Manufacturing Lafbert Innovation, IPI, and a few more are already at full CKD levels. More are gearing to move to that level including Dangotesinotruck, Transit support assemblers of Shacman, FAW etc.
The OEMs on ground in Nigeria all have EV programmes at their home basis. If they are encouraged they will naturally bring the technology here. Stallion recently launched a sample EV vehicle in Lagos Nigeria last year and repeated the launch in Abuja this year. This is an indication of what will happen.
It doesn’t matter that Nigeria is dependent on Hydrocarbon or not. The world is moving on with the agenda to reduce or eliminate carbon footprint globally. The earlier we diversify our economy, the better. We should realise that very soon, the world will set up very heavy penalties for all those who continue to pollute the environment by their activities. We should support activities like manufacturing, mineral and food processing that adds value.
This is what grows a country’s GDP not selling oil although the money is good if you plough it back in the real sector. Saudi Arabia, through its sovereign wealth fund is investing massively in the electric drive technologies. This is a world leading oil producer.
How does this policy speak to Nigeria’s preparedness with the Federal Government setting a target of 2025 for 30 percent locally made cars to be Electric vehicles?
How can you be setting a target when you don’t even have Electric vehicle policy? These are just mere wishful thinking by whoever said it. Measure should be put in place through a deliberate policy to encourage current licensed assemblers to pursue the EV agenda. They should be the only ones to import them to start with at low import duty but they must come up with a clear agenda to grow the technology locally. It is only thenthat we can be setting dates. You think those who set dates just wake up from sleep and set dates? It’s based on well thought-out policies and programmes. Besides, how can you pursue a programme when the investors in the industry are being undermined?