Bennett Oghifo
The Lagos Chamber of Commerce and Industry (LCCI) and automotive stakeholders have called for affordable vehicle financing to replace fuel subsidy as a means of easing Nigeria’s mobility crisis and making vehicle ownership accessible to low- and middle-income Nigerians.
They made the call on Thursday at the LCCI/National Automotive Design and Development Council (NADDC) Automobile Symposium, themed, “From Subsidy to Credit: Can Vehicle Financing Replace Fuel Subsidy as Nigeria’s Mobility Equalizer?”
Chairman, LCCI Auto and Allied Sector Group, Dr Femi Eguaikhide, said the sharp increase in transportation costs following the removal of fuel subsidy in May 2023 had exposed the need for a new approach to mobility affordability.
According to him, while fuel subsidy kept transportation relatively affordable for decades, it did little to address the high cost of vehicle ownership, leaving productive assets largely beyond the reach of ordinary Nigerians.
“Subsidy made fuel cheap, but cars remained expensive. So only the rich owned productive assets,” Eguaikhide said.
He argued that affordable vehicle credit could enable commercial operators, small-business owners and other income earners to acquire vehicles and repay loans from the income generated through their use.
Eguaikhide called for preferably single-digit interest rates and longer-tenor lease-to-own arrangements for operators of buses, tricycles and motorcycles.
“Can we create a N50,000/month plan for a keke driver?” he asked, urging financial institutions to design repayment structures around borrowers’ earning capacity.
He also proposed the use of vehicle telematics, tracking systems and cash-flow information to develop “mobility credit scores” that could help lenders assess commercial transport operators who may not have conventional collateral.
But Eguaikhide warned that making vehicle credit available without strengthening local production could worsen Nigeria’s dependence on imported used vehicles.
“If we use credit to import more Tokunbo, we’ve solved nothing,” he said.
He therefore advocated financing for CNG conversions, locally assembled electric and hybrid vehicles, as well as mass-transit buses.
“Subsidy gave us consumption. Credit can give us production,” he said.
In a special address, Chairman and Chief Executive Officer, Cedric Masters Group, Chief (Sir) Anselm Ilekuba, similarly called for a shift from subsidy-driven mobility to a vehicle financing system that would also support local automotive industrialisation.
Represented by the company’s Chief Finance Officer and Head of Accounts and Strategy, Christabel Mmesoma Ilekuba, he said high financing costs, short repayment periods and pressure on household incomes had made vehicle ownership increasingly difficult despite strong demand.
Ilekuba urged the Federal Government to consider the proposed National Automotive Bank being championed by NADDC as a specialised financing platform for vehicle buyers, assemblers and component manufacturers.
He proposed longer-tenor financing for qualifying locally assembled vehicles, alongside industrial credit to support machinery, technology, certification and capacity expansion among component manufacturers.
He also called for stronger localisation of automotive components, citing the proposed National Automotive Components Parts Gateway being developed by the Automotive Local Content Manufacturers Association of Nigeria (ALCMAN) with Chinese partners.
According to him, linking affordable vehicle credit with local assembly and component manufacturing could stimulate demand, expand industrial capacity, create jobs and reduce pressure on foreign exchange.
Ilekuba said the impact of the proposed financing model should therefore be measured beyond the number of vehicle loans granted to include growth in local assembly, component production, factory expansion, employment and foreign exchange conserved or earned.
“The old subsidy helped Nigerians consume mobility. The new approach should help Nigerians own mobility—and help Nigeria produce it,” he said.
The stakeholders’ proposals place affordability at the centre of Nigeria’s mobility challenge, while seeking to ensure that increased access to vehicle finance translates into greater domestic production rather than another surge in imported vehicles.