21/05/2020
News
The sunshine state of Ondo, has kickstarted an industrial roadmap that would see the South western state begin producing vehicles through a semi-knock down (SKD) plant. The state governor, Rotimi Akeredolu, is perhaps witnessing his 2017 trip to China paying-off, as the Bi-City Agreement entered between Ondo state and the Mayor of Linyi , is beginning to translate into jobs and economic opportunities in Nigeria.
The state governor , had in February announced that Ondo will begin producing trucks in June, however, this launch today is one month ahead of schedule. Some 200 trucks assembling will kickstart the project , which will be followed by SUVs, saloon cars and many other types of vehicles.
My Contribution.
Production of vehicles is not what a State Government should get involved in. Why? It's absolutely a ruse to say that you are producing a vehicle under what the news termed SKD. SKD means (Semi Knocked Down) a system of value chain in getting a vehicle assembled. What business is a Government doing in a business? Instead, I expect a drive for indigenous businessmen to collectively invest in projects of interest.
Note that there are two SKD's in the 2014 Federal Government policy on importing vehicles, non of the SKD1 or SKD2 actually makes you a producer of vehicles, the producer of the vehicle as recognized by World Automotive Producer Association is the actual base of the components production and in this case China (Again).
Economics of Vehicle Production recognizes the following indices;
1. Engine Production - (not Nigeria)
2. Gearbox Production - (not Nigeria)
3. Clutch Mechanisms - (not Nigeria)
4. Axles & Differentials - (not Nigeria)
5. Wirings & Electricals. - (not Nigeria)
6. Body Chassis - (not Nigeria)
7. Body Panels & Fenders- (not Nigeria)
8. Lamps & Trafficators - (not Nigeria)
9. Vehicle Tyres. - (not Nigeria)
10. Seats & Upholstery. - (not Nigeria)
11. Windows & Machines - (not Nigeria)
12. Windscreens (F&R) - (not Nigeria)
13. Chemicals & Paints - (not Nigeria)
14. Labour Of Production - (Nigeria & Chinese)
Can you then call these Vehicles made in Nigeria? Absolutely No!
Only about 3%-5% in the SKD production is a human content resources.
What have we been doing? We have been helping China to promote, sell and use its product.
What type of deal that China have probably pulled off Ondo State?
1. The Government will donate free expance of land
2. SKD Parts Investment (Actually about 90% as Lots)
3. SKD Assembly (Human content about 3%) and
4. SKD logistics to Assembly Plant (Payment by Ondo State)
5. Assembly Trainings (Not a professional training, it is a fitters training).
6. And some credit offshore accounts.
This is just looking at a typical Chinese deals. I am not saying that this is what Ondo State signed with China, I am certain that is what was signed. Who gains? Who lose? These are typically a Non-understanding of Economic disposition of charting a business development in an unknown turf. We are eventually buying and selling Chinese vehicles for China, while we indulge in the funding of the same investment. China gains, we lose.
Was there any Economic Impact Assessment? Just like Environmental Impact Assessment (infact both are essential in this case). Who is going to buy your Vehicles? Has it been tested? What is the reorder level for parts? What's ETA for lots? (China will not ship until last Yuan is paid? Did Ondo State have a ready market or its usage analysis on vehicle consumption?
Did they know that they are indirectly competing with an (Ondo indigenous Company) GAC Chinese vehicles by Elizade? And Innoson China? Hahaha.
Did Ondo State do a sustainability index?
Only time will tell? Good luck!
Long live Africa.
