The Nigerian Motorcycle Manufacturing Industry: A Struggle for Self-Sufficiency
The Nigerian motorcycle manufacturing industry faces significant challenges in its pursuit of self-sufficiency and a reduced reliance on imported components. While the National Automotive Design and Development Council (NADDC) advocates for a component deletion program, the industry grapples with obstacles that hinder its progress. These challenges include a lack of commitment from Original Equipment Manufacturers (OEMs), political interference from motorcycle importers, and the high cost of local production. The Executive Director of the Motorcycle Manufacturers Association of Nigeria, Lambert Ekewuba, highlights the need for government intervention to attract OEM investment and streamline the industry to facilitate local component production.
The NADDC’s push for a motorcycle and tricycle component deletion program stems from the heavy reliance on imported components, which burdens foreign exchange reserves and disrupts supply chains. While the government recognizes the need for local production, its efforts have been hampered by a lack of decisiveness and political maneuvering by motorcycle importers within the government. This resistance to change undermines the industry’s efforts to establish Nigeria as a manufacturing hub for motorcycles and tricycles in Africa. While Nigeria currently serves as a transit point for motorcycles destined for neighboring countries, the goal is to transition from a mere distribution center to a true manufacturing powerhouse.
The Nigerian Automotive Industry Development Plan (NAIDP) aims to transform Nigeria into a regional manufacturing hub, allowing other African countries to source motorcycles and tricycles from Nigeria instead of relying on imports from China or India. However, realizing this vision requires implementing crucial structural reforms. One major hurdle is the absence of OEMs in Nigeria. Local manufacturers primarily assemble imported components, lacking the technology and equipment for original manufacturing. Convincing OEMs to invest in Nigeria and establish local production facilities is critical for the success of the component deletion program. This would involve transferring technology and licensing local manufacturers to produce components according to OEM specifications.
A significant challenge in implementing the component deletion program is the sheer number of motorcycle brands and assemblers in Nigeria. With over 50 brands and 33 manufacturers, achieving economies of scale in local component production becomes difficult. The diverse range of models and specifications makes it challenging to standardize parts and achieve the production volumes necessary to justify investments in manufacturing equipment. Manufacturers hesitate to invest in producing specific components when the demand for those components is fragmented across numerous brands. Streamlining the number of brands and models in the Nigerian market is essential to create sufficient demand for locally manufactured components.
The high cost of operating a factory in Nigeria poses another substantial obstacle to local component production. Inconsistent power supply, high dollar exchange rates, and import duties on raw materials all contribute to increased production costs. Ironically, the duty on imported raw materials for producing motorcycle parts is often higher than the duty on importing completely knocked-down (CKD) motorcycles. This discrepancy makes local manufacturing economically unviable. For instance, the 10% import duty on steel, a crucial raw material for motorcycle rims, discourages local production. It’s more cost-effective to import finished rims than to manufacture them locally, considering the added burden of overhead costs and unstable electricity supply.
To address these challenges, Ekewuba suggests focusing on the after-sales market for locally produced components. This involves increasing import duties on spare parts that can be manufactured locally, creating a protected market for Nigerian manufacturers. This strategy would provide an immediate opportunity for local manufacturers to compete while also incentivizing the eventual production of components for the assembly of new motorcycles. Ultimately, the success of the component deletion program hinges on collaboration between the government, local manufacturers, and OEMs. Attracting OEM investment, streamlining the number of motorcycle brands, and addressing the high cost of local manufacturing are crucial steps towards achieving self-sufficiency in the Nigerian motorcycle industry.
