BusinessDay 19 Oct 2017

Thursday 19 October 2017
12 BUSINESS DAY
C002D5556
EDITORIAL
PUBLISHER/CEO
Frank Aigbogun
EDITOR-IN-CHIEF
Prof. Onwuchekwa Jemie
EDITOR
Anthony Osae-Brown
DEPUTY EDITOR
John Osadolor, Abuja
NEWS EDITOR
Bill Okonedo
EXECUTIVE DIRECTOR,
SALES AND MARKETING
Kola Garuba
EXECUTIVE DIRECTOR, OPERATIONS
Fabian Akagha
EXECUTIVE DIRECTOR, DIGITAL SERVICES
Oghenevwoke Ighure
ADVERT MANAGER
Adeola Ajewole
MANAGER, SYSTEMS & CONTROL
Emeka Ifeanyi
HEAD OF SALES, CONFERENCES
Rerhe Idonije
SUBSCRIPTIONS MANAGER
Patrick Ijegbai
CIRCULATION MANAGER
John Okpaire
GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
GM, BUSINESS DEVELOPMENT (South)
Ignatius Chukwu
HEAD, HUMAN RESOURCES
Adeola Obisesan
EDITORIAL ADVISORY BOARD
Dick Kramer - Chairman
Imo Itsueli
Mohammed Hayatudeen
Albert Alos
Funke Osibodu
Afolabi Oladele
Dayo Lawuyi
Vincent Maduka
Wole Obayomi
Maneesh Garg
Keith Richards
Opeyemi Agbaje
Amina Oyagbola
Bolanle Onagoruwa
Fola Laoye
Chuka Mordi
Sim Shagaya
Mezuo Nwuneli
Emeka Emuwa
Charles Anudu
Tunji Adegbesan
Eyo Ekpo
NEWS ROOM
08022238495
08034009034}Lagos
08033160837 Abuja
ADVERTISING
01-2799110
08116759801
08082496194
ENQUIRIES
A retrogressive auto policy
From independence in
1960 to the early 1980s
Nigeria grew a solid
and robust middle
class of professionals
– Doctors, teachers, professors,
Engineers etc – who were
financially secure, lived in GRAs
around the country, could afford
to educate their children
up to university levels (then our
universities were still centres
of excellence), visited cinemas
and prestigious restaurants and
social clubs often, shopped in
exclusive shopping malls and
could buy new cars easily.
Then came the structural
adjustment programme (SAP)
and the devaluation of the
naira. The unintended consequence
was the decimation
of the salaries of the middle
class. Imported goods became
expensive and out of the reach
to all but the elite. New cars automatically
went out of the rich
of the middle class and they
had to resort to buying used
vehicles popularly known as
Tokumbo in Nigeria.
Gradually, those professionals
(majority of them) who
had the opportunity to relocate
abroad left and those who
couldn’t leave or didn’t want
to leave were demoralised.
Also, the desired locations of
the middle class became run
down and shabby. By the time
Nigeria returned to democracy
in 1999, the middle class had all
but vanished.
However, by the turn of the
21st century, a noticeable change
occurred. Through the great
work done by the democratic
regime of President Olusegun
Obasanjo, the middle class was
gradually restored and began to
grow in leaps and bounds to such
an extent that Nigeria became an
attractive investment destination
to many auto firms (to set up
assembly plants) and large chain
super-market stores.
However, the progress has
now firmly been cut short. Due to
the deliberate policy choices and
inactions of the government, of
course, sparked by low oil prices
and scarcity of foreign exchange,
the naira has taken such a severe
hit that the country was thrown
into recession.
Expectedly, the economic
recession with its attendant suffering
is not affecting the poor
alone. True, prices of consumer
goods and services consumed
mostly by the poor have tripled.
But the steep decline in the value
of the naira has also affected the
prices of luxury and aspirational
goods and services demanded
by the middle class also.
Just like it happened in the
late 1980s and 90s, Nigeria’s robust
but fragile middle class that
expanded greatly from 2002 due
to deliberate government policy
is now shrinking and at the risk
of disappearing entirely. Their
fat salaries have been eroded by
the steep decline in the value of
the naira and they can hardly afford
to shop in foreign boutiques
and stores in Victoria Island and
Ikoyi again. Even the fanciful
cars they had always bought is
now largely above their reach
and they had to make do with
imported used (Tokunbo) cars.
To drive the nail into the coffin
of the middle class, a deliberate
government policy has now
priced Tokumbo cars out of the
reach of the middle class. The justification
was the implementation
of the National Automotive Industry
Development Plan (NAIDP) of
2013 meant to grow the volume of
locally assembled vehicles by raising
tariffs on imported cars.
However, the devaluation of
the naira has made rubbish of
that policy. But how does the
government care? It has gone
ahead with the implementation
of the policy charging 35 percent
import duty and another 35 percent
surcharge, making it a total
of 70 percent of the market price
of the vehicle. The new charge,
which applies to a unit of any
imported vehicle, irrespective
of the model or brand, makes
importation through the land
borders (smuggling) far cheaper
than through Nigerian seaports.
But it is not only the people
that are suffering. By implementing
such punitive tariff regime
on imported vehicles, the government
has ceded most of the
revenues it should be making
to Benin Republic, which has
taken advantage of the Nigerian
government’s irrational policy
action to lower its duty on imported
vehicles. What is more,
the current structure now provides
a rich avenue of corruption
to customs’ officials who give
genuine customs’ documents
to these smuggled vehicles for a
fee while turning Nigeria into a
dumping ground for accidented
vehicles – the major types of vehicles
being imported into the
country via the seaports
We are baffled that the government
can be so retrogressive
and almost irrational in policy
decisions. The lack of effective
demand for new cars has stymied
any plans to establish vehicle
assembly plants in Nigeria.
The plan is now helping to price
out used cars from the reach of
Nigerians. That is most retrogressive
and should be stopped.
SUBSCRIPTIONS
01-2799101
07032496069
07054563299
www.businessdayonline.com
The Brook,
6 Point Road, GRA, Apapa,
Lagos, Nigeria.
01-2799100
LEGAL ADVISERS
The Law Union
MISSION
STATEMENT
To be a diversified
provider of superior
business, financial and
management intelligence
across platforms accessible
to our customers
anywhere in the world.
OUR CORE VALUES
BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent,
Entrepreneurial and Purpose-Driven.
• The Fourth Estate: We take pride in being guarantors of liberal economic thought
• Credible: We believe in the principle of being objective, fair and fact-based
• Independent: Our quest for liberal economic thought means that we are independent of private and public interests.
• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do
• Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share
our vision, while treating them with respect and fairness.
www.businessdayonline.com