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LCCI commends FG’s decision to review Auto Policy

Mr. Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industry

Lagos Chamber of Commerce and Industry on Sunday commended the Federal
Government’s decision to review the Automotive Policy.

Muda Yusuf, Director-General of LCCI, gave the commendation
in a statement in Lagos.

He said that the Automotive Policy which was established in
2013 by former President, Goodluck Jonathan’s administration, had failed to
achieve the desired outcomes.

Yusuf said: “It has adversely impacted the cost of doing
business, welfare of the people, government revenue and the capacity of the
economy to create jobs.

“The policy has also penalised stakeholders in the sector
that are compliant with extant rules, taxes and tariffs applicable to the
automobile sector.

“The cost of vehicles has risen beyond the reach of most
citizens and corporate bodies; the impact has been largely negative with far
reaching consequences.”

The News Agency of Nigeria reports that the auto policy is an
import substitution industrialisation strategy to reduce importation of
vehicles and incentivise domestic vehicle assembly.

It has an import levy of 50 per cent on new cars and 25 per
cent on used vehicles, asides the import duty of 20 per cent on new cars and 10
per cent on used vehicles.

He noted that import substitution strategy thrived in the
context of high domestic value addition and within a framework that the economy
could benefit from, saying the policy in its current form was not sustainable.

He said: “Five years into the implementation of the auto
policy not much progress has been made, even though over 50 Vehicle Assembly
plants licenses have been issued.

“Total annual sales of new cars in 2017 and 2018 are
estimated at less than 10,000 units.

“We have witnessed an increase in the prices of vehicles by
200 to 400 per cent, over the last five years, not many investors and the
citizens have the capacity to pay these outrageous prices.

“These unintended consequences and collateral harmful effects
on the economy and welfare of citizens are incalculable.”

He urged government to reduce the import levy of 50 per cent
on new vehicles to 15 per cent, and the import levy on used cars and commercial
vehicles be reduced to 15 per cent from 25 per cent.

Yusuf said that tax concessions and waivers should be given
to assembly plants, and Semi-Knocked Down vehicles should attract 5 per cent
duty to incentivize domestic vehicle assembly.

According to him, other incentives for assembly plants and
tyre industries to acquire machineries and equipment should be retained as
contained in the Automotive policy, and similar incentives be extended to local
production of vehicle spare parts.

He said that patronage of locally assembled vehicles by the
government and its agencies should be encouraged and enforced.

He said: “Vehicle purchase finance facility at single digit
should be put in place to boost demand for automobiles and age limit of used
vehicles should be reduced gradually over time to lessen road safety risks.”

He said adoption of the recommendations would create more
jobs, reduce smuggling, boost maritime sector activities and improve vehicle
affordability by the middle class.

Yusuf noted that the Nigerian Ports Authority and ports
terminal facilities would be optimally utilized for better revenue performance
and Customs Service revenue from vehicle imports would also be boosted.

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