The Executive Director of the Motorcycle Manufacturers Association of Nigeria, Lambert Ekewuba, stresses the need for the Federal Government to strike a deal with Original Equipment Manufacturers to achieve a successful component deletion programme and detailed how local manufacturers brave the odds to remain profitable in a chat with ARINZE NWAFOR
What do you make of the National Automotive Design and Development Council’s position on implementing a Motorcycle/Tricycle Components Deletion Programme to end over-reliance on imported components?
We acknowledge the sentiments of the NADDC. Our continued importation is a burden on the foreign exchange. For many years, we have imported motorcycles in a completely knocked-down state primarily from China, India, Japan, and Pakistan, as well as other countries. It’s a heavy burden on the foreign exchange and has disrupted our supply chain, putting the motorcycle and tricycle subsector at risk.
However, the Federal Government has already planned this deletion programme for a long time. Nevertheless, we need to attract Original Equipment Manufacturers to invest in Nigeria and produce some of their parts here. The government has never made up their mind on this.
There’s a lot of politics around it. Most of our politicians are importers of motorcycles, so there is always a lot of politics whenever the government tries to bring in these investments to Nigeria.
Motorcycles are not exempt from the universal effects that heavy reliance on importation has on our foreign exchange. The government is collaborating with us to establish Nigeria as a hub for motorcycle and tricycle manufacturing in Africa.
In what way does the government work with you to make Nigeria a hub?
We ship most of our motorcycle brands to Cameroon, the Central African Republic, Togo, and Benin. This has made Nigeria a hub for motorcycles and tricycles.
Nigeria’s huge population makes it a good choice for countries like China to route their products through to not only West Africa but also the larger African continent. They consider it more affordable to have Nigeria as a one-stop country for motorcycles and tricycles, hence making it a hub.
That is why we have the Nigerian Automotive Industry Development Plan. It aims to make Nigeria a hub for motorcycles and tricycles. Other countries will import from Nigeria instead of going to China or India.
We understand the government’s plan and have advised that they need to put structures in place to ensure it succeeds.
What are these structures, and how soon should we expect this plan to bear fruit?
Not very soon, but the government should begin implementing the NAIDP soon.
On the structures, we have to realise that Nigerian motorcycle manufacturers are not OEMs. That is, we don’t have the original manufacturing equipment. We are not the owners of the motorcycles. You must convince the owners to establish their technology here in Nigeria.
Speaking of component deletion, no OEM wants a component that they did not certify for their motorcycle. I will use an example with Honda. As a Japanese brand, Honda will not automatically allow Nigeria to delete some of their franchised parts. We are not the OEMs, so it’s difficult. We will have to convince them to bring some of the technology here.
The government’s deletion programme is not bringing completely knocked-down products into the country to assemble. We produce some components here in Nigeria and add imported ones to assemble the product.
Honda may operate with a standard that does not permit its motorcycle to be coupled with another product not approved by them. This poses a difficulty to the success of the deletion programme.
Which part of the deletion programme have local manufacturers started?
The government planned to begin the deletion with the plastic components of the motorcycle and tricycle. We can easily do that because we have the raw materials here in Nigeria.
Most of the assemblers are saying we can start producing for the after-sales market. That is, if a particular part of a motorcycle or tricycle is spoiled, then you can replace it with one made in Nigeria. Many of the motorcycle parts we are using are produced in Nigeria. In Nnewi, some manufacturers produce trafficator lenses, footrests, and mud flaps.
Nigeria must come to the table with OEMs to ensure it has a successful component deletion programme. OEMs such as Toyota may license a manufacturer in America to produce a part according to their specifications. That is how we can attract these OEMs to allow us to do the delegation programme.
What other challenges do you face in the deletion programme?
Another challenge is that there are many brands. We have to streamline most of these products in Nigeria.
As we have over 50 motorcycle assemblers, that is how we have over 50 brands. You would consider volumes. How many volumes can you produce to make your turnover? You cannot go and get a mould to manufacture a part, and that mould cannot cover the expenses within a year.
There must be some generic parts. Very common. So that if you streamline the number of motorcycles in Nigeria, they can use the same parts.
Say I make headlamps; I’d have to be certain of the quantity of motorcycles in Nigeria that can use them to produce up to 2,000 pieces. It would be riskier if I were to bring an expensive mould, get my machinery, and set up a plant to produce a headlamp for only 50 units. It’s not feasible.
We have different brands of motorcycles, and the government has to streamline them. In Nigeria, we have over 33 manufacturers, so how can one delete? How can you produce the parts? How can you encourage somebody to produce a part that does not have quantity at the end of the day? How can you import machinery just to produce 50,000 units in a year? Then you can’t pay workers.
I suggest that the government allow us to produce for the after-sales market. This means that we have to increase duties for the importation of any spare parts manufactured in Nigeria, including fenders, trafficators, leg shields, leg rests, and chain case covers. We raise duties on select spare parts to protect the local manufacturers.
Have these challenges affected your sales?
Yes, it has affected our sales. Many state governments also banned the use of motorcycles for security reasons. It led to a drastic drop in sales.
The motorcycle business thrives more in urban cities. People in cities use motorcycles to get to their offices and places of business. When motorcyclists lawfully operated in these areas, they made more money. The quantity of sales was higher in a month. For example, in a month, Bajaj would sell over 3,000 units. The same thing applies to many other assemblers. Sales of motorcycle bikes began to drop when these bans started.
What level did the sale of motorcycle bikes drop to?
The selling price was increasing and fluctuating between N2.2m and 2.5m. Before it got so high, we sold more. That is why many of them are going to Cameroon, Togo, and Benin to sell motorcycles there.
What factor inhibits Nigerian manufacturers from making local components?
The high cost of operating a factory in Nigeria makes it uneconomical to produce.
Do high energy costs explain why OEMs are yet to bring in their technology?
Every administration in the country faces a peculiar problem. With the present administration, there is no constant power. The dollar rate is high, and people cannot sell. It is challenging when many people import but are unable to sell due to the costs. How do you sell your spare parts if the assemblers are not selling their end products?
The major raw material we use is steel, and like most raw materials, it is still imported. There is no nice harmonisation of the duty rate.
Paying a higher duty on the raw materials for producing some motorcycle parts than if we import a CKD motorcycle from Europe or Asian countries is also challenging.
We pay 10 per cent to import the raw materials used to produce motorcycle rims. So, how can you make it? Because of these high duties, we’d rather import complete rims than manufacture, never mind that we also deal with the attendant overhead costs.
