The Nigerian government recently ratified the National Automotive Industry Development Plan (NADIP) which, according to the Minister of Trade, Otunba Adeniyi Adebayo, intends to transform the country into a hub for automotive manufacturing. The NADIP is expected to run for ten years (2023 to 2033), yielding 1 million jobs and encouraging government agencies to purchase and use locally-made vehicles, especially electric vehicles.
The plan involves increasing Nigeria’s involvement in locally-made vehicles and electric vehicles (EVs). The National Automotive Design And Development Council (NADDC) predicts that by 2033, Nigeria will be at 40% and 30% production capacities for local vehicles and electric vehicles respectively. Unlike North America and Europe, EVs aren’t common in Africa. However, that’s changing.
Findings from Mordor Intelligence show that the electric vehicles market in Africa was worth $11.94 billion in 2021. The report projects that the market will be worth $21.39 billion by 2027, representing a compound annual growth rate of 10.2%. The figures indicate that the industry has lots of promise. The question, however, is: is the continent ready to accommodate millions of EVs?
Revisiting Nigeria’s auto policy journey
The NADIP’s adoption not only solidifies efforts to ramp up locally made vehicles in Nigeria but also ends the decade-long controversy regarding the bill. Conceived in October 2013 by the Goodluck Ebele Jonathan-led administration, the policy aimed to “diversify Nigeria’s economy and revenues through industry and to increase manufacturing’s contribution to GDP from 4% to 6% by 2015, and finally above 10% by 2017.”
Furthermore, home-based assembly parts could import completely knocked-down parts (CKD) and semi-knocked-down parts (SKD) for 0% and 5-10% respectively. To reduce Nigeria’s over-reliance on foreign automobile imports, the NADIP set the duty for new and pre-owned vehicles brought from abroad at 70%.
The gains expected to be accrued included job creation and investment promotion. To tackle the issue of infrastructure deficit, the NADIP provided for the establishment of “automotive supplier parks and clusters” which would allow stakeholders to combine resources and expertise for the greater good.
The NADIP was scheduled to commence in 2014 and end in 2024. However, trouble struck when President Muhammadu Buhari refused to sign the bill into law in 2020 because it conflicted with some current regulations regarding auto manufacturers’ incentives.
To increase the chances of approval, it underwent a series of revisions before it was presented again for review. While the policy has finally seen the light of day, many stakeholders believe the Nigerian government should have approved it earlier. It’s hard to disagree.
Commenting on the late adoption of the NAIDP, Head of Strategy and Projects at JET Electric Vehicles Company, Joseph Olu believes the policy had to be revamped. Speaking to Technext, he said:
“When this plan was formulated in 2013, it didn’t cover all that it should have. Now it does and I believe that’s still a win. Attempting to produce 40% of local vehicles may sound tough, but nowadays we have more participants in the auto sector making tricycles. We (Jet) specialize in vans that can serve various use cases like logistics, fleet operation, and passenger transport.”
Read also: MyCoverGenius is enabling fully digitized low-cost insurance coverage among Nigerians
Nigeria’s long and tough path to adoption of electric vehicles
Policies, no matter how exceptional they are or the benefits they promise, must be accompanied by sustainable infrastructure. And it’s not just about creating an enabling environment for local automakers. Jelani Aliyu – Director General of the NADDC, said in 2021 that 50% of the EVs on Nigeria’s 195,000 kilometers of roads would be locally made.
Aliyu’s pledge is brave. But given the current state of affairs, agreeing with this promise is difficult. Nigeria is a hub of epileptic power supply, a plague spanning many decades. The situation wasn’t helped by the privatization of assets belonging to the now-defunct Power Holding Company of Nigeria. Some say the blackouts have worsened.
Electric vehicles, unlike the internal combustion vehicles that importers ship into Nigeria yearly, rely on a battery pack that owners must charge regularly. While EVs can be charged at home like smartphones using a Level 1 cord, owners can fill up quickly when using a public charger (Level 2 and Level 3).
Compared to petrol stations, EV charging stations are sparsely populated in Nigeria. Recall in 2021 a Tesla EV reportedly ran out of juice, requiring the owner to have it towed. That’s why MAX NG, a mobility company supporting the adoption of EVs, is building a network of battery-swapping stations to ensure riders aren’t stranded when the battery dies.
When asked about the possibility of EVs thriving in a market rife with challenges like poor power supply and limited charging stations, JET Motors’ Joseph Olu says he believes the government has to demonstrate a great amount of will before this can work.
Many years ago, no one believed we could make GSMs mainstream, but that’s no longer the case today. If the government is willing to support this policy with infrastructure and the necessary investments, then it’ll work as planned. If the government approaches this matter with the same will, then we’ll have another technology revolution in our hands. We have the resources to generate energy which these EVs will need.”
Joseph Olu
Another potential roadblock to EV adoption, even when they become available in mass numbers, is the low awareness among citizens. Tesla, Lucid, and Polestar – three major electric-only brands – are relatively unknown in the country, especially the rural areas. If people aren’t properly educated on EVs, their benefits (zero carbon emissions and low-cost savings for instance), and available models then why will they want to own one?
Besides, Electric Vehicles are notoriously expensive mainly because of the cost of production. The Hyundai Kona Electric – the first EV locally assembled in Nigeria – is priced approximately between N24,000,000 and N30,000,000. Just recently, the National Bureau of Statistics put Nigeria’s inflation rate at 22.22%. With the cost of food and other basic amenities steadily climbing, millions of Nigerians will hardly consider buying an electric vehicle in the coming years.
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