Nigeria's 2025 budget should accelerate automotive industry
ON December 16, 2024, the Federal Executive Council (FEC) approved the 2025 budget with a total expenditure of N47.9 trillion. This represents a 35 percent increase from the 2024 budget. And this significant increase, according to the FG, is aimed at lifting millions of Nigerians out of poverty. However, amid this ambitious spending plan, there is a glaring need for a thriving automotive industry in Nigeria. The 2025 budget is predicated on an oil price of $75 per barrel, with a production target of 2.06 million barrels per day. While the Federal Government remains optimistic about the oil sector, it has become pertinent for concerned Nigerians to be wary of the budget's projections due to Nigeria's history of budgetary difficulties: no thanks to ongoing deficits, mounting debt, and slow economic growth.
Withal, a thriving automotive industry can play a crucial role in diversifying the Nigerian economy, while reducing dependence on oil exports and creating employment opportunities. Currently, the country relies heavily on imported vehicles, which puts a strain on the country's foreign exchange reserves. By developing a local automotive industry, Nigeria can reduce its reliance on imports, conserve foreign exchange, and promote economic growth. Brands like Innoson motors should be given every support they could get. But then, there is a need to highlight the key challenges facing the Automotive Industry in Nigeria like the lack of infrastructure which includes good motorable roads, transportation networks, and storage facilities. The high cost of borrowing and limited access to finance could also hinder the growth of the automotive industry in Nigeria. Need I add that the influx of imported vehicles undermines the competitiveness of locally assembled vehicles?
In the midst of all these, however, there are opportunities for growth if the federal government is willing to see beyond the lens. If the Federal Government can provide incentives like tax breaks, subsidies, and investment in infrastructure, to support the growth of the automotive industry, there is big assurance this will contribute a meaningful quota to the economy growth. Investment in private sector investment can also provide the necessary capital to establish and expand automotive manufacturing facilities in Nigeria, likewise the regional market opportunities like the African Continental Free Trade Area (AfCFTA) which provides a vast market opportunity for Nigerian-made vehicles. To surmise, Nigeria's 2025 budget presents an opportunity for the government to prioritise the development of the automotive industry. By addressing the challenges facing the industry and leveraging opportunities for growth, Nigeria can reduce its dependence on oil exports, promote economic growth, and create employment opportunities.
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