TheCable

Vice President Yemi Osinbajo says the federal government is working a policy that will mandate all ministries, departments and agencies of government to buy cars produced or assembled in Nigeria.

Osinbajo was speaking at the 26th edition of the Nigerian Economic Summit organised by the Nigerian Economic Summit Group (NESG) where he represented President Muhammadu Buhari.

The vice president explained that the directive will insulate local manufacturers from the reduction in car import levy proposed in the draft 2020 finance bill.

According to Osinbajo, the government has found that high transportation cost is one of the factors responsible for the increase in food prices.

“The point of reducing duties and levies on motor vehicles is to reduce the cost of transportation by reducing the cost of vehicles,” he said.

“The subsequent removal of fuel subsidies and an increase in fuel price has had a pass-through effect on food prices, transportation costs and so on.

“Now, the automobile policy is directed at localised production of vehicles so the logic then was that if you increase duties and levies on imported cars and imported vehicles, local production becomes more competitive and this is a compelling argument, however, the annual demand for vehicles is about 720,000 vehicles per year but actual production today by the assembly plants that we have is 14,000 vehicles a year.

“So the problem is that at the current rate of production we will not meet the serious national needs and this will just mean higher prices of vehicles and greater strain on other sectors of the economy that depend on transportation/ But we are not giving up on the auto industry.

“Two important things to note; the first is that we still have relatively high duty 35 percent so there is still a disincentive for importation. Second is that we are promoting policy that the government must buy only locally manufactured cars.”

Speaking on a different panel at the summit, Zainab Ahmed, the minister of finance, budget and national planning, said the reduction in import levy will arrest food inflation.

She said every government’s responsibility is to look out for the welfare of the people first before businesses.