President Buhari has assigned portfolios to ministers. 14 ministers from the past administration were retained, while 29 were newly appointed. The cabinet has more political loyalists and other allies than technocrats, which should make for more effective coordination and control. Strategic positioning for competitiveness will be dependent on a genuine and authentic embracing of a mixed economic model by the leadership. A reliance on dogmatic principles of protectionism in a world of increased competition will only discourage already wary investors.
The Nigerian automobile industry remains a shadow of itself in spite of the auto-importation policy of 2014 (another attempt at protectionism). Used cars now account for approximately 70% of the cars on the road in Nigeria with a used/new car ratio of 134:1. The country spent an estimated $526 million in 2018 on importing used cars, 68% higher than the previous year.
With the signing of AfCFTA, implementation of other reform-oriented policies should encourage investors to increase their level of commitment to the Nigerian market. Nigeria’s share of global investment flows has been declining over time. A reversal of this trend will help make auto manufacturing more efficient. This will help boost growth and output.
In this edition of the FDC Bi-monthly publication, the FDC Think-Tank analyses these issues and their implications on businesses and the economy at large.
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