Nigerians who have struggled to buy brand new cars may have cause to smile again, as government is currently putting in place a loan scheme to enable them finance purchase of the vehicles. Director-General of the National Automotive Design and Development Council Jelani Aliyu mentioned this at an event held in Abuja.
“The programme is being re-designed to involve more Nigerian banks. It is expected that once this is launched, more Nigerians can afford more new cars and the provision in NAIDP to restrain import of used vehicles will be applied.
Who benefits from this
Local car manufacturers such as Innoson would benefit greatly from the move, as well as owners of assembly plants in the country such as Peugeot, and Toyota Nigeria Limited. Associated services such as insurance firms also stand to benefit.
Consumer finance is just half the problem
As admirable as the move is, it only solves one half of the problem. Nigerians prefer used cars because they are far cheaper than brand new cars. Brand new cars are expensive because of the high tariffs imposed, and when locally assembled the prohibitive costs of doing business in the country. Rather than provide consumer loans, the government can provide auto assembly plants in the country support.
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Government has a poor record when it comes to managing loans, and the individuals who receive them may end up not paying back. Similar schemes that had been implemented by previous regimes, met with mixed success. As long as used cars continue to be cheaper than brand new cars, there will be robust demand for them. Limiting their import will lead to an increase in smuggling, which will deny the government revenue.