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SUNDAY JUNE 26, 2016, SUNDAY TELEGRAPH
BUSINESS NEWS
Viable automotive industry will boost Nigeria’s economy – Aromlaran In his appraisal of President Muhammadu Buhari’s administration, Mr. Tokunbo Aromlaran, Chairman National Automotive Manufacturers Association (NAMA), the umbrella body of Original Equipment Manufacturers; in this interview with PAUL OGBUOKIRI, said government’s input in the automotive industry may have been unnoticeably calm, but stakeholders are optimistic the Federal Government would not renege on its pledge to implement the needed policies for a robust automotive industry. Excerpts: How will you assess the incumbent administration’s temperament to the quest for a feasible automotive industry since their inception about 365 days ago? The administration of President Mohammadu Buhari came in barely three years after the National Automotive Industry Development Plan (NAIDP) was approved by government and no sooner the policy document was launched than the Original Equipment Manufacturers (OEMs) swung into action with a rush of investments into the sector. The policy seeks to revive domestic production of automobile, using local human and natural resources with a view to enhancing the industry’s contribution to the country’s Gross Domestic Product (GDP). The impact of the policy on the automotive segment has in fact been tremendous. In fact, it is short of spectacular. As at the last count, more than 12 entrepreneurs have taken up the challenge and commenced operations, with fresh investment running to billions of naira. There is still a long way to go in getting us to the Promised Land. We are looking to this administration to take it to the next level and really own it. There has, however, been very little interaction or activity with this government on the policy. We understand the Honourable Minister is accessible but haven’t been able as a segment to interact with him. But being from the private sector we believe he is positively disposed to the policy. We are aware that the government is taking a critical look at the policy with a view to tweaking it to achieve their own idea of development and hope they will engage the authentic stakeholders who have already invested so much in the take-off of the sector shortly. What do you suggest the government should do especially at this time to reawaken the sector for renewed growth? If the government is serious about developing our industries, it should determine the strategic industries going by the National Industrial Revolution plan and determine the incentive package it would put in place to accelerate their take-off. The incentive package would take into account the peculiar disadvantages investors face in Nigeria because of failure to develop our infrastructure and put them in a position to compete. The auto industry falls into this category. Without mincing words, a viable vehicle manufacturing industry is capable of creating huge multiplier effects for the Nigerian economy and society. Other nations with developed auto industries towed the same path. There is so much for the government to do in this respect. The previous governments merely scratched the surface of the issue by putting in place the auto policy. The government can take the credit for giving it a bite by actually putting out a strong incentive package to attract major OEMs and seeing it through. This is the way to reawaken our productive capacity and create a future for the children of the poor and down-trodden. Does that imply the government is unacquainted of the potential of the automotive industry? Recently I read an excerpt of a speech from the Honourable Minister of Trade and Industry outlining the path of growth
for the industry. His thoughts were in line with the Auto Policy initiatives so the government is well acquainted with the potentials of the sector and what should be done. It is a question of overcoming the inertia. Statistics compiled by various government agencies including the Nigeria Automotive Manufacturers Association (NAMA) confirmed that in that a total of about 400,000 vehicles (100,000 new and 300,000 used) valued at over N550billion were imported into the country. Now imagine if one fifth of that quantum of imports were assembled locally using available local resources; won’t the country be much better off?
Aromlaran
What then is your conviction? It is my conviction that the government is well aware of the positive and multiplier effects a vibrant auto sector can have on the economy. I believe they are figuring out how to assume ownership of the programme started by the previ-
ous administration and how to improve on it. This has taken the better part of one year without a formal engagement of the association of automotive manufacturers. We are forced to believe that the government is being distracted by many naysayers and interested parties who wish to slow down progress in the sector. The way forward is clear, very easy to decipher if you are objective and desirous of moving this country forward. Many people have benefited from trading and are feeding government with negative reports and holding back the pace of development of the industry. The investors in the Nigerian Auto Manufacturing segment are indeed hopeful and that’s why there is still tremendous activity in the automotive sector in spite of very difficult operating environment of policy uncertainty, dearth of skilled labour, poor infrastructure and scarce foreign exchange. Government needs to demonstrate in double quick time its conviction that support of the auto policy is good for this country. This will assure investors that government is a continuum and policies will not be dumped for the sake of ‘change’. Investors will only respond when they perceive a stable and supportive industrial environment.
African assets slump as Brexit vote triggers commodity decline
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urrencies, stocks and bonds plunged across Africa after the U.K.’s vote to leave the European Union triggered a slump in oil and other commodities and sent investors scurrying for safe assets. South Africa’s benchmark share index fell the most since May 2010 to a third weekly decline, led by stocks with listings in London and by diversified mining companies. The rand dropped to a record against the yen and by the most since 2008 against the dollar before paring the decline, while yields on dollar bonds from Ghana to Kenya rose. Gold miners rallied by the most since 2008 before trimming gains as the precious metal, seen as a haven in times of turmoil, soared. “We’re going into a very difficult, very volatile time with prices moving in all sorts of directions; lots and lots of uncertainty,” Ron Kiplin, a money manager at Cratos Capital in Johannesburg, told Bloomberg. “And we still need to see what impact really, from a South African perspective, it has on emerging markets.” The victory for the “Leave” campaign may weigh on African economies as prices of raw materials fall, with the Bloomberg Commodity Index dropping 1.5 per cent on Friday as crude oil fell 4.5 per cent to below $50 per barrel. Gold rose 4.6 per cent to $1,314.20 an ounce, the most on
a closing basis since January 2009. The debate over the U.K.’s EU membership has dominated investor sentiment throughout June, with appetite for riskier assets having built up over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four. The rand slumped 8 per cent against the greenback before paring the decline to trade 3.3 per cent weaker at 14.9010 by 5:16 p.m. in Johannesburg. It fell 6.6 per cent to 6.8647 yen after plunging as much as 13 per cent. It gained 4.4 per cent against the pound to 20.5404. Most Volatile South Africa’s currency is the most volatile among 24 emerging-market peers, according to data compiled by Bloomberg, suggesting it often trades as a proxy for risk sentiment. A British exit from the EU could shave about 0.1 percentage point off South Africa’s economic growth, according to researchers from North-West University. The U.K. is the fourth-biggest destination of South African exports, according to data compiled by Bloomberg. “We’re just caught up in the bloodbath,” said Phillip Pearce, a dealer at Treasuryone in Pretoria, the South African capital. “The rand always overshoots everyone. It’s such a liquid currency that it becomes a proxy for
all the other emerging markets and for risk assets in general.” South African government bonds fell the most since March, with yields on benchmark rand bonds due December 2026 climbing 21 basis points to 9.09 per cent. African Eurobonds plunged, with yields on Nigeria’s dollar bond due in 2023 rising 24 basis points, the most since Feb. 8, to 7.32 per cent. Ethiopia’s 2024 Eurobond yields climbed 10 basis points to 7.98 per cent, the highest since June 14. Investors also sold Rwanda’s dollar debt due in 2023, with
the yields jumping 27 basis points to 7.59 per cent. Kenya’s benchmark equity index ended 1.8 per cent lower, the biggest drop since Oct. 15. The East African country’s finance minister said the vote may slow inflows to Africa, while the central bank said it would intervene in the money and foreign-exchange markets to reduce volatility. “The kind of volatility being witnessed is crazy,” Faith Atiti, a research analyst at Nairobibased CBA Capital, said by phone. “Equities are coming down like crazy.”
G7 vows to boost global growth
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he Group of Seven industrial powers pledged on Friday to seek strong global growth, while papering over differences on currencies and stimulus policies and expressing concern over North Korea, Russia and maritime disputes involving China. G7 leaders wrapped up a summit in central Japan vowing to use “all policy tools” to boost demand and ease supply constraints. “Global growth remains moderate and below potential, while risks of weak growth persist,” they said in a declaration. “Global growth is our
urgent priority.” Japanese Prime Minister Shinzo Abe, talking up what he calls parallels to the global financial crisis that followed the 2008 Lehman Brothers bankruptcy, said the G7 “shares a strong sense of crisis” about the global outlook. “The most worrisome risk is a contraction of the global economy,” led by a slowdown in emerging economies, Abe told a news conference after chairing the two-day summit. “There is a risk of the global economy falling into crisis if appropriate policy responses are not made.”