Wednesday, 05 August 2015 09:33

SA-Nigeria motor industry plan is a win-win for both countries

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Automotive-industryxxcFormer cabinet minister Alec Erwin says his work to get Nigeria’s automotive industry off the ground is no threat to auto companies in SA, but rather that the sectors in SA and Nigeria will "complement each other".

The "whole intention" was to "increase opportunities for the SA auto industry", said Mr Erwin, who is chairman of Ubu Investment Holdings.

But opinion on the issue is split, with David Powels, former MD of VW South Africa, warning the SA industry could lose out to Nigeria without carefully implemented support policy.

As trade and industry minister, Mr Erwin contributed to the success of the Motor Industry Development Programme (MIDP) which helped modernise SA’s motor industry from 1995 to 2012. He was one of a number of South Africans sought out by Nigeria in 2010 to provide advice on its automotive programme, modelled on the MIDP.

In the 1980s Nigeria was assembling more than 250,000 vehicles a year, with firms such as Peugeot, Volkswagen and Mercedes-Benz Trucks having operations there. Then Nigeria cut import tariffs, making local assembly unnecessary, so manufacturing plants were nationalised and sold. Nigeria is now looking to revive the industry.

"We then came to the SA government and said we should work closely with the Nigerian government," said Mr Erwin. "There are often partnerships between different countries."

He referred to Nigeria’s plans to move from assembly to full manufacturing. Semi-knockdown for too long was "silly" as it got too expensive. "We want to do complete knockdown."

It is that long-term full manufacturing plan that has many concerned. "Will we co-operate as a common customs union?" asked Gavin Maile, automotive leader at KPMG Africa. He had also heard Nigeria wanted local suppliers, which would make co-operation difficult. "If countries we (SA) are talking to agree to co-operate and use our components it’s a win-win, but if they impose duties then there is nothing in it for SA."

But Mr Erwin says he is confident Nigeria and other African countries will produce some models and SA others.

There are doubts about this. Nissan SA and Nissan Nigeria both produce the NP300 bakkie. SA exports kits to Nigeria but the two will likely become competitors once Nigeria produces its own components.

-BusinessDay RSA

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