Nigeria is on course to becoming the hub of Africa’s automotive industry. With over 182 million people and a fast growing middle class, Nigeria is definitely the right choice for investors in the automotive sector.
The Nigerian auto industry has for years been largely import driven, however, in the early 80’s, the Federal Government set up state-owned plants across the country via agreements with European Original Equipment Manufacturers (OEM): Peugeot Nigeria Limited (PAN), Styer Nigeria Limited and National Truck Manufacturers (NTM) in Northern Nigeria; Volkswagen of Nigeria Limited (VON) and Leyland Nigeria Limited in the South, Anambra Motor Manufacturing Company (ANAMMCO) in the East.
In order to harness the potential of the automotive sector, the Nigerian government in 2013 announced a new national automotive policy, the National Automotive Industry Development Plan (NAIDP), which seeks to dissuade vehicle importation and inspire local production. The National Automotive Design and Development Council (NADDC) seek to ensure the timely implementation of the provisions of the policy as part of its mandate to revitalize the auto industry.
Nigeria imports about 400,000 vehicles (100,000 new and 300,000 used) annually, valued at about US$3.45 billion. The automotive industry currently generates around 2,600 jobs but has the potential to create about 70,000 direct jobs and 210,000 indirect jobs.
The auto industry presents a U$3.45 billion opportunity in import substitution. With over 182 million people of whom over 40 million are in the growing middle class, Nigeria represents a major potential opportunity for investments in the auto sector.
Nigeria’s potential new annual new-car market could be circa one million. However, it currently sits at about 56,000 in a market dominated by used cars. The current administration is making strong efforts to discourage importation and has revived 14 assembly plants for local production.
- Pioneer Status (tax holiday) granted for 3 years and renewed for the next two years
- 100 percent repatriation of profit net of taxes
- Capital allowance not restricted. Granted in full -100%
- Investment Promotion and Protection Agreement: The IPPA helps to guarantee the safety of investment of the contracting parties in the event of war, revolution, expropriation or nationalization.
Source: Nigeria Investment Promotion Commission
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