Nissan is proud to become the first global carmaker to build cars in Nigeria since west Africa’s largest economy rolled out a policy to tempt investors into its nascent automotive industry.
The Japanese carmaker, which has aggressively targeted growth in emerging markets as the centrepiece of its global strategy, has built over 45,000 cars within a year in the country, with SUV among other Nissan series commissioned by Nigerian government mid-year 2014.
Nissan, announced further that it would be the first international carmaker to build vehicles in Myanmar, targets a doubling of sales in Africa to 220,000 by 2016.
Nigeria, which imports millions of dollars worth of new and used cars into the country every year, has embarked on a drive to attract manufacturing and industrial investments into the country since former Goldman Sachs banker Olusegun Aganga was made minister of trade and investment.
While it is sub-Saharan Africa’s biggest recipient of foreign investment with roughly $7bn in 2012, or about 14 per cent of the region’s total, investors complain that Nigeria remains a challenging destination for industrial ventures because of a lack of power supply, poor transport infrastructure and an unskilled labour force.
African countries, long overlooked by global carmakers, are being seen as one of the last remaining untapped sources of growth for the industry, after heavy investments in recent decades in India, China and southeast Asia.
“Nissan is preparing to make Nigeria a significant manufacturing hub in Africa,” said chief executive Carlos Ghosn, the global car industry’s most prominent believer in emerging market potential. “As the first-mover in Nigeria, we are positioned for the long-term growth of this market and across the broader continent.”
The UN Conference on Trade and Development puts Nigeria as the fourth-best destination for foreign direct investment when measured by returns, only behind Angola, Bahrain and Kyrgyzstan. Unctad estimates that FDI projects returned on average 36 per cent in Nigeria in 2011, compared with an average for emerging markets of 8.4 per cent.
Volkswagen and Peugeot previously built cars in Nigeria but have since closed factories.
The global alliance between Nissan and French partner Renault had facilitated the signing of Memorandum of Understanding with the Nigerian company Stallion Group, to begin vehicle assembly in Lagos same year 2014.
Renault is mulling the possibility of joining Nissan in building cars in the country, a spokesman for the alliance said.
The entry is the first since Nigeria’s government unveiled a new automotive industrial policy designed to encourage carmaking. The Japanese company will build cars, light duty trucks, pickups and vans in the country, it said.
It also has a factory in Morocco and in South Africa, where it will begin production of its relaunched low-cost Datsun cars by the end of next year.