FG Set To Roll Out Affordable Vehicle Credit Purchase Scheme
Millions of Nigerians will soon be able to afford new cars as the Federal Government, through the National Automotive Design and Development Council (NADDC), is putting in place a vehicle credit purchase scheme that will enable Nigerians buy locally assembled cars at low interest rates with payment period spread over a period of about four years.
According to the NADDC Director of Policy and Planning, Mr. Luqman Mamudu, the Council is contributing about N7.5 billion into the scheme with a counterpart funding from a company in South Africa with the aim of making Nigerian made vehicles affordable for Nigerians and promote massive patronage for the products of the local assembly plants.
Speaking at a meeting with Commerce and Industry Correspondents Association of Nigeria (CICAN) in Lagos, Mr. Mamudu said, “This is what we have been working on for the past two years.”
“We looked at the available assess to asset financing in the country and we found out that the high interest rate is frustrating the purchase of new vehicles. This is the gap we want to fill. We are currently 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.”
“At NADDC, we are also contributing our own N7.5 billion into the scheme while the South African company will help source for finance from Development Finance Institution (DFI) at single digit interest rate while our own N7.5 billion injection into the scheme will be interest free.”
He added that when the funds are put together, it will guarantee an interest rate that will be easy for people to purchase vehicles at an interest rate that is fairly okay. We are 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 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 the good credit to purchase a car. If you go to America, over 80 per cent of car purchases are through loans. The credit purchase scheme will assist the operators to help the masses.
He said the Council is planning to build huge capacities in local assembly plants in order to attract vehicle component manufacturers from across the globe to set up their factories in Nigeria.
We are also building three auto test laboratories costing about N3 billion in Lagos, Kaduna and Enugu States; all of which are about 90 per cent complete and would be ready for commissioning by the end of the year. The one in Lagos is a vehicle emission testing laboratory, the Enugu laboratory is for components tests while the laboratory in Zaria, Kaduna State is for materials testing and vehicle evaluation.
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.
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 when this happens, we can export from here to earn foreign exchange.
We are calling on the OEMs to use Nigeria as a manufacturing hub for the whole West Africa but we must be steady and focused so that we do not loose the opportunity.
He announced that the current combined installed capacity of all the vehicle assembly plants in the country is 384,000 vehicles per annum even though only 25,000 vehicles had been assembled locally thus far.
He emphasized that the Federal Government will continue to pursue strategies to stop the influx of second hand vehicles into the country, noting that the Nigerian auto policy will go a long way to provide better alternatives for people that previously patronized ‘tokunbo’ cars.
Source(National Automotive Design and Development Council (NADDC)