More Nigerians are expected to ride brand new cars soon – thanks to a loans scheme which is in the works.
The Federal Government is pushing the credit scheme through the National Automotive Design and Development Council (NADDC). It will give Nigerians a chance to buy locally assembled vehicles.
According to the Director, Policy and Planning, Mr. Luqman Mamudu, the council is contributing about ₦7.5 billion at a low interest rate. Counterpart funding is coming from a company in South Africa.
Speaking during a press briefing in Lagos, Mamudu said: “This is what we have been working on for the past two years. We looked at the available access to asset financing in the country, we found out that the high interest rate is frustrating the purchase of a new vehicle. This is the gap we want to fill. We are working with a company in South Africa which has footprints in eight African countries where they have developed a commercial and financial model to recoup their investment.”
NADDC is contributing ₦7.5 billion into the scheme. The South African company will source for finance from Development Finance Institution (DFI) at single digit interest rate.”
Mamudu said when the funds are put together, it will guarantee an interest rate that will be easy for people to purchase vehicles at 8 to 10 per cent.
”By the time we put the funds together, it will guarantee an interest rate that is fairly okay.
“We are in discussion with the Central Bank of Nigeria (CBN) to originate the loans and float it so that it will be attractive for investors to partake in the scheme. Going forward, this will further bring down the interest rate. This facility will be given to people that have the capacity to buy cars because we expect that they will have good credit to purchase a car.
“If you go to America, over 80 per cent ýof car purchases are through loans. The credit purchase scheme will assist the operators to help the masses,” he added.
Mamudu said the council was planning to build capacities in local assembling to attract component manufacturers to set up their factories in Nigeria.
“We are building three laboratories costing about ₦3 billion in Lagos, Kaduna and Enugu. The one in Lagos is an emission testing laboratory to test for the level of emission. We are almost 90 per cent complete. We also have a component part manufacturing testing laboratory in Enugu. We are doing all these to prepare for the next stage of component development because this is where job opportunities are enormous, but the entire process requires patience on the side of government and investors.”
Mamudu went on: “We have to encourage these Original Equipment Manufacturers (OEMs) to come with their capacity. If we create the right environment for them, they will come with their capacity to produce here and if this happens, we can export from here to earn foreign exchange. We are calling on the OEMs to use Nigeria as a hub for the whole West Africa, but we must be steady and focus so that we do not loose the opportunity.”
Nigeria has the capacity to assemble 384,000 vehicles. Only 25,000 have been assembled so far.
Mamudu pointed out that the Federal Government will continue to pursue strategies to stop the influx of used vehicles into the country, noting that this scheme will go a long way to give alternatives to people who patronise fairly used cars.