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One of the apparent gains of the recent visit of German Chancellor, Angela Merkel to Nigeria is the Memorandum of Understanding to develop an automobile hub in Nigeria she sealed with the federal government on behalf Volkswagen Group.
Under the agreement, Volkswagen would implement a phased approach in relation to the assembly of vehicles, initially from assembly kits with the long-term view of establishing Nigeria as an automotive hub for the West Coast of Africa.
However, industry analysts say the survival of the understanding will largely depend on the stability of electricity and prevailing federal auto policy which has been criticized for its lock up of investment opportunities.
One of the key survival means of several manufacturing companies in Nigeria in recent time has been self provision of power with less dependence on national grid.
Besides, some experts who were in the know of how the first investment drive of the company failed when it was mostly needed may haunt current moves to reappear into the Nigerian auto manufacturing.
The first assembly plant located along the Lagos-Badagry Expressway started having issues of sales right from when imports of fairly used vehicles surged between the 80s and 90s.
The imports did not only frustrate Volkswagen, but other auto firms including the Peugeot Assembly of Nigeria, Kaduna.
Though Nigeria has the market to buy any number of good and durable car product, competition with exotic Korean brands may become a big problem going forward.
During the deal, the Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, signed on behalf of the Federal Government, while Volkswagen’s Head of sub-Saharan Africa, Thomas Schaefer, signed for the group.
Business Hilights gathered that the agreement would enable the group to establish a training academy in conjunction with the German government to develop the capacity of the initial employees.
The academy would also provide broader technical training in automotive skills, it was gathered.
The pact is also said to provide for a comprehensive Volkswagen vehicle and service network to be developed in the country subject to commercial viability.
Enelamah while speaking during the signing of the pact described the agreement as a major step towards the development of a robust automotive industry.
He said, “We believe in the strategic and catalytic role of the automotive industry in the diversification of the Nigerian economy and we remain committed to encouraging and partnering relevant stakeholders, especially investors and friends of Nigeria.
“We will meet our commitments and look forward to welcoming other Original Equipment Manufacturers interested in working with us to increase local production, local procurement, and exports.”
In his response, the Director-General of the National Automotive Design and Development Council (NADDC), Jelani Aliyu, said that as Africa’s largest economy and most populous country, Nigeria would offer not only a significant domestic market, but also the opportunity of a gateway to the West African market.
“We are pleased with the progress we have made in our engagement with Volkswagen, and excited to be partnering a strong stakeholder with a full understanding of the huge potential Nigeria represents.”
However, Schaefer said with the agreement, Volkswagen had been able to demonstrate that it was serious about its intentions in sub-Saharan Africa, stressing that “We are well placed to become a dominant player in Africa, as the continent continues to stabilise and develop economically, as the last frontier for the automotive industry.”