Nigeria has the potential to become the hub of Africa's automotive industry; this is according to a report released by PwC.
The report adds that this will see imports of used cars into Africa’s largest economy fade out by 2050.
Andrew Nevin, Partner Africa Strategy and Operations at PwC Nigeria said there was appetite for new cars in the economy urging the sector to improvise a workable model.
“The reality is that Nigeria is the biggest economy in Africa, it has 14 million cars on the roads but there is only 100,000 new cars purchased every year. So people look at it as a small market,” he said.
“Of those 100,000 cars about 50 thousand are imported. As the economy grows, people will not want to buy used cars but news cars. People want to buy cars but there are challenges with both income and credit gaps.”
Nevin said there was need to offer credit to prospective new car buyers like most economies were doing.
“We think that one of the biggest barriers is lack of credit. Most of the economies do not sell cars through a cash basis but they buy through borrowing, this needs to be addressed in Nigeria,” added Nevin.
He believes the government's policy clarity is set to boost the sector.
“The government has now polices meant to actively encourage car production in Nigeria. The interesting thing about the car industry is that it is easy to get local production going by bringing semi knocked down kits (a kit containing parts needed to assemble a product) and complete knocked down kits,” he said.
“The government policy around tariffs is going to push for the industry to have this semi knocked down and complete knocked down kits.”