The executive will also propose a legislation to back up the policy.
Nigeria currently spends about N550 billion on the importation of cars into the country annually, the Minister of Information, Labaran Maku, and the Minister of Trade and Investment, Olusegun Aganga, disclosed on Wednesday.
The ministers, who briefed journalists after the meeting of the Executive Council of the Federation, FEC, said the Council has now approved a new Automotive Industrial Policy Development Plan for the development of the Nigerian automotive industry.
Mr. Aganga had brought a memo seeking Council’s approval of policy measures to transform the Nigerian automotive industry and attract investments into the sector.
The minister disclosed that as at 2012, Nigeria spent a total of N550 billion ($3.4billion) and N660 billion ($4.2 billion) in 2010 on the importation of cars. He added that this showed that car importation takes the biggest share of the country’s foreign reserves, followed by machinery.
While explaining the policy to journalists, Mr. Aganga said the policy was drawn over a period of nine months with the input of the National Automotive Council (NAC). He added that foreign car manufacturing giants like Toyota and Nissan are expected to start announcing their specific investments in Nigeria.
Mr. Aganga said the success of the policy will also mean a gradual phase out of fairly used (Tokunbo) cars imported into Nigeria and create a minimum of 700,000 jobs for Nigerians.
He said the pitfalls of similar policies in the past such as the non-implementation of policies, lack of infrastructure, and inappropriate tariff regime were considered and adequately addressed in the new policy. He said the Federal Road Safety Corps and local vehicle assembly plants/manufacturers were involved in the formulating the policy.
He also disclosed that Nigeria and Bangladesh were the only top countries in the world that did not have a successful automotive policy.
The minister outlined the points of the new policy to include the establishment of three automotive clusters in Lagos/Ogun, Kaduna/Kano, and Anambra/Enugu states to share resources and reduce cost of investments; the development and revival of the petrochemical and metal/steel sectors; and the tyre manufacturing industry to support the automotive sector.
He added that new tariff regimes will be adequately set to discourage the importation of cars and encourage local manufacture while government continues to take the lead in patronage of locally made vehicles. He added that banks will be encouraged to operate vehicle purchase schemes to enable Nigerians easily purchase cars.
The Council also approved the directive that all government vehicles be purchased from local assembly plants unless they are of specialized nature and NAC has certified that they cannot be produced in Nigeria. The council’s decision is to be backed by appropriate legislation to give comfort to investors that there will be no abrupt change in policy.