Proposed 2026 trade policy changes may jeopardize domestic manufacturing, car manufacturers caution

The Nigerian Automotive Manufacturers Association, NAMA, has urged the Federal Government to bolster its 2026 fiscal policy reforms with robust industrial protection measures, cautioning that unfettered tariff liberalisation could jeopardise investments in the country's automotive manufacturing sector, as stated in a position paper submitted to the Minister of Industry, Trade and Investment, Jumoke Oduwole.

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The document, co-signed by NAMA Chairman, Mr. Bawo Omagbitse, and the association's Executive Director/Chief Executive Officer, Dr. Harpreet Singh, was also copied to the National Automotive Design and Development Council, NADDC, highlighting the need for a balanced approach to trade liberalisation and industrial support.

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NAMA commended the Federal Government's efforts to stimulate economic growth and align Nigeria's trade policy with the ECOWAS Common External Tariff and the African Continental Free Trade Area, AfCFTA, while also welcoming initiatives that promote locally manufactured vehicles.

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The association expressed concern, however, that the reduced duty gap between imported fully built vehicles and locally assembled units could undermine the competitiveness of domestic manufacturers, thereby threatening the viability of the local automotive industry.

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According to NAMA, narrowing the tariff differential could erode decades of investment aimed at building Nigeria's automotive industry, reducing the protection local assemblers need to achieve economies of scale and deepen local content, as noted by Omagbitse, who stated that the industry is still at an infant-to-intermediate stage.

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NAMA cited data from the Nigerian Ports Authority, showing that vehicle imports surged by 67 per cent, rising from 35,262 units in the first quarter of 2025 to 58,870 units during the same period in 2026, reflecting importers' expectations of lower duties on fully built vehicles ahead of the implementation of the new fiscal measures.

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The association warned that premature market liberalisation could lead to increased vehicle imports, reduced local assembly volumes, lower factory capacity utilisation, and weaker incentives for investment in assembly plants and component manufacturing, including tyres, batteries, plastics, automotive glass, and other locally produced parts.

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Singh emphasized that the association supports the government's objectives of improving affordability, boosting revenue, and advancing regional trade integration, but stressed that these goals should be implemented alongside industrial incentives, sequencing reforms with the industrial support measures that successful automotive economies established before opening their markets.

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NAMA pointed to countries such as Thailand, Morocco, South Africa, and China, which combined tariff protection with production incentives, supplier development programmes, export promotion, and infrastructure support before fully liberalising their automotive sectors, as examples of effective industrial development strategies.

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Reviewing Nigeria's automotive policy between 2014 and 2020, the association acknowledged that local content development and production capacity remained below expectations, attributing the situation largely to the absence of legislation backing the Nigeria Automotive Industry Development Plan, NAIDP, and the resulting lack of long-term policy certainty for investors.

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To strengthen the industry, NAMA proposed restoring a wider duty differential between imported and locally assembled vehicles, making consultations with NADDC and the Ministry mandatory before introducing future automotive fiscal policies, and urgently passing the NAIDP into law.

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The association also recommended production-linked incentives, the establishment of an automotive supplier development fund, priority foreign exchange access for industrial inputs, and dedicated energy and logistics support for manufacturers, warning that Nigeria risks becoming a major vehicle consumption market without developing into a significant automotive manufacturing hub.

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NAMA reaffirmed its commitment to supporting the Federal Government's economic reform agenda and expressed its readiness to continue engaging with the Minister of Industry, Trade and Investment and the Director-General of NADDC on policies that promote sustainable growth in Nigeria's automotive industry.