Senate, NADDC Task Automakers on Backward Integration

The Nigerian Senate, in collaboration with the National Automotive Design and Development Council (NADDC), has urged automakers in the country to prioritize backward integration in their production processes. The call was made during a recent session focused on revitalizing the automotive industry and reducing Nigeria’s dependence on imported components.

Importance of Backward Integration

Backward integration involves sourcing raw materials and manufacturing key components locally, rather than relying on imports. According to the Senate, embracing this strategy is essential for:

• Boosting local industries: Encouraging the growth of upstream industries, such as steel and rubber production.
• Creating jobs: Generating employment opportunities across the value chain.
• Reducing foreign exchange pressure: Minimizing the demand for dollars needed to import materials.

Senate’s Position

Senate President Godswill Akpabio emphasized that the automotive sector holds significant potential for economic diversification. He highlighted the need for policies that incentivize local production and discourage the importation of fully built units (FBUs).

NADDC’s Role

Jelani Aliyu, the Director-General of NADDC, reiterated the council’s commitment to supporting automakers in achieving backward integration. He outlined initiatives such as:

• Access to financing: Providing loans and grants for local manufacturers.
• Capacity building: Training programs to develop skilled labor in the sector.
• Infrastructure development: Establishing industrial parks to support automotive production.

Challenges Facing Automakers

Despite the push for backward integration, automakers face several obstacles, including:

• Inadequate infrastructure: Poor roads, unreliable power supply, and limited industrial facilities.
• High production costs: Expensive raw materials and energy costs increase the burden on local manufacturers.
• Policy inconsistencies: Frequent changes in government policies discourage long-term investments.

Recommendations

Stakeholders at the session proposed actionable steps to enhance backward integration:

1. Tax incentives: Offering tax breaks for companies that use locally sourced materials.
2. Partnerships: Encouraging collaborations between automakers and local suppliers.
3. Research and development: Investing in innovation to improve production efficiency and quality.

Conclusion

The Senate and NADDC’s call for backward integration is a critical step toward building a robust and self-reliant automotive industry in Nigeria. By addressing existing challenges and fostering collaboration among stakeholders, the sector can become a significant driver of economic growth and development.