A billion naira industry
Nigeria has become self sufficient in cement production, one of the most demanding sector in the manufacturing industry. Nigeria has never imported noodles or many of the products made by Unilever, PZ and Nestle. While many importers have attempted to bring in imported brands of chocolate drinks and toothpaste, Nigerian manufactures such as Cadbury (with Bournvita), Nestle (with Milo) and GSK (with Sensodyne) have driven many imported substitutes that were probably made in places where cost of production is very low compared to that of Nigeria. How did they achieve this? Simple. The cost of shipping some toothpaste from Netherlands to Lagos is far more expensive from moving Oral B from the P&G Ibadan plant to Sokoto. Therein lies the opportunity for Nigerians to take over this potential multi-billion naira industry before the South Africans invest in it.
So, what am I driving at?
Take a drive around the streets of Lagos, Port Harcourt, Kano, Ibadan or Abuja. The best selling brand new car in Nigeria is the Toyota Corolla. Almost all bank branches in Nigeria have at least two of them and they are depreciated in four years. Last year, in June 2012, the Nigerian Government removed the tariffs on importation of airplane spare parts in order to encourage the airlines to start maintaining their aircrafts in Nigeria. Prior to that Nigerian airlines found it cheaper to fly their planes out of the country, change the necessary parts and them fly them back without attracting any cost from the Government. They were forced to do this because it was prohibitive to ship in the spare parts and fix them in Nigeria. Now, that is no longer the case and airlines now find it easier to maintain their fleets.
It is not going to cost the Government of Nigeria anything to raise the tariff on an imported new car from 30% to 300% in order to jump start the production of new cars in Nigeria. We should stop complaining about the electricity situation and get to work. We can start up with a few Toyota Corolla car plants in the outskirts of three or four major cities across the country. These plants will have to import the parts into the country with zero tariff in order to drive down the cost of production and assemble the cars right here in Nigeria. It is no rocket science to assemble a car. A roadside mechanic can assemble a car. These plants should also enjoy zero tariff on automated car assembly machineries.
There are about 6,000 bank branches in Nigeria. Let us assume that each branch buys two of these Corollas once in 4 years. Each of these branches has at least four businesses and/or individuals who buy these cars once in 4 years. That is a total of 36,000 Corollas every 4 years translating to 12,000 new cars every year. Now we have not factored in the big companies such as the telecoms, media houses, law chambers, advertising agencies, etc. An average Corolla goes for about N4.5 million. Assuming the price is dropped to N2.5 million, that is going to be equivalent to about N30 billion revenues every year. I might have underestimated this figure because such price point will certainly make the car more attractive to the middle income earner.
This idea will help reduce unemployment across the country. The city of Detroit in the US is largely dependent on production of cars. Who says we cannot have our own "Detroit" right here in Nigeria? I do not believe that the Government will not be amenable to this idea but the billionaires that can afford this kind of investment are probably too busy running after low hanging fruits.