Government plans to launch car finance scheme that will allow Innoson cars to be bought at 6% interest rate

GOVERNMENT ministers are planning to unveil a domestic automobile finance scheme that will allow consumers to buy cars from indigenous manufacturer Innoson Motors at 6% interest rates in an ambitious attempt to boost local production.

Heralded as Nigeria's first step on the road to industrialisation, Innoson Vehicle Manufacturing is a local automobile and bus company founded by Innocent Chukwuma and that runs an assembly plant in Nnewi in Anambra State. However, Innoson struggles to compete with foreign imports that can offer big discounts and which are technologically superior.

Aiming to spur local automobile manufacturing, 70% of Innoson car parts are produced in Nigeria, while the rest is being imported from Japan, China and Germany. In a bid to give the company a big boost, the federal government has revealed that it would soon be allowing car buyers to purchase cars at 6% interest rates.

Jelani Aliyu, the director-general of the National Automotive Design and Development Council (NADDC), said the policy was aimed at discouraging the importation of vehicles into Nigeria. He added that the NADDC would soon roll out a financial scheme that would afford Nigerians the opportunity to purchase vehicles with only a 10% deposit of the market price, with the remaining balance paid off at rates of between 6% and 8%.

Mr Aliyu said: "In other nations when you want to buy a vehicle, you go, you put down 10% to 15% and you drive off with the vehicle. You then pay for it over a number of years at just 6% interest rate but that is non-existent in Nigeria.

"When you have a vehicle financing system with an interest rate of about 20%, it is high. We are talking with three banks and will soon be rolling out what we call the Automotive Vehicle Finance Scheme."

He added, however that access to the finance will only be provided for vehicles that are manufactured in Nigeria. According to Mr Aliyu, Nigeria is spending over $8bn on the importation of vehicles and other automotive related products. 

Mr Aliyu added: “That is $8bn that simply goes out of our economy to purchase 300 to 400 vehicles per year. In about a month and half, we will roll out the vehicle finance scheme so that Nigerians will be able to put in maybe 10% or less and drive off with the vehicle and pay over a couple of years at just 6% to 8% interest rate.

"We really think this will improve local capacity for production of vehicles in the country and these finances are only for made in Nigeria vehicles. Most of these vehicles imported into the country are used so there is a lot of challenges with efficiency, safety, not to talk of zero contribution into our economy."

He pointed out that the NADDC was working to discourage importation and encourage manufacturing within Nigeria. Mr Aliyu added that three industrial parks are currently being built to alleviate the infrastructural deficit that has also been a barrier to local car production within Nigeria.