By Ayo Alonge, [email protected]
With over 24 years of chairing the affairs of his automobile dealership, Akeem Ojora, the Chief Executive Officer of Ojora Autos Nigeria Limited, bares his mind on the automobile business in Nigeria while lamenting that high exchange rates and import duties are killing the sector. He also commented on issues bordering on business and the economy.
What challenges do you face in running an automobile dealership in Nigeria?
The major challenge is the high exchange rate of the dollar right now. It’s alarming because it’s killing the business of importation of cars. We, as a company, don’t get bank loans.
To what extent has the high exchange rate affected your business?
The exchange rate, as it is today, has affected us as a company totally. The dollar rose from about N200 to $1 to about N500 to $1. That is over 100 per cent. Everything has skyrocketed with such crazy rise of the dollar.
Despite this, do people still buy cars?
What are you saying? In fact, I was impressed by the way people came out en masse to buy cars. Anyway, maybe because of the new turn that car importation is now taking, many probably felt that prices of cars would go up in the New Year. People bought a lot of cars last year.
Where did the money come from, especially as we keep complaining the recession is severe?
Well, I wouldn’t know where people got the money. For a very long time, I hadn’t experienced such before. Maybe that was about 10 to 13 years back.
What challenge do you encounter, as an importer, at the seaports?
As an importer, you have to hand over your shipment to the clearing and forwarding agents. These clearing and forwarding agents have different characters. Some would know that what they’ve demanded from you cannot clear your shipment but just to get the job from you, they charge you lower and after that, they demand more money. They would have started the job for you and there is no way you would prefer losing your shipment to giving them more money.
Despite the challenge of having to pay heavy duties, how does your company still make enough profit?
Yeah, that’s our experience but at the end of the day, what you buy is what you sell. Due to the exchange rate today, many have had to forgo some profit margin. Maybe you are supposed to make 20 per cent profits, you may have to just manage making 5 per cent. The business continues, unless you have any other job you are doing.
What do you have to say about the demand for cars as it is now?
Nothing has really changed. Owning a car is no longer a luxury. It is a daily need of people now. People still come and buy. Some come and only get to see that they cannot afford it now. We now have about 70 per cent increases in the prices of cars. They come and go but 60% of people can still afford it.
What’s your opinion of the Nigeria Customs and Excise Service and clearing and forwarding agents?
We don’t really deal with the Customs. It is the clearing agents that deal with Customs, not importers. We come in contact with the Customs only when Customs is not clear with the shipment before it. Maybe an issue with your passport, driver’s licence or international ID card that may require you to appear before Customs as an importer.
What I mean is that can’t one be eliminated so you would have to deal with just one standing between you and the shipping company abroad?
The Customs is the intermediary between the government and the shippers. The Customs does all that for the government. The clearing agents know about the job of going about clearing your shipment that may not even be known by the importing company. This is their job. Say it this way, the Customs works for the government while agents work for importers. Customs generate their money into the coffers of the government.
What is responsible for the hike in prices of cars?
That is due to the exchange rate. It is the exchange rate that has affected prices of cars; it is not that their prices have risen. At a time, if you have $1,000 dollars, you would get about N200, 000 but today, you need N500, 000 to get $1,000. That was about two years ago. You could get a car for $2,000 dollars from abroad. It is because the exchange rate is very high too. Government is also saying that your clearing fee should go with your exchange rate. That is what we are facing.
Aside the challenges of high import duties and exchange rate, which other challenge does your company face, doing business in Nigeria?
Another challenge is car theft. When you display your car, a criminal can come to you and pose as a prospective buyer. He runs away with the car while test-driving it.
Have you ever fallen a victim?
Not in that way but our car has been stolen from the parking lot.
What can be done to prevent car theft?
Government just has to improve on security. We advise people generally to have comprehensive insurance on their cars so that whenever anything happens and especially as a dealer, you have some claims.
What is your view on government’s recent ban on importation of vehicles through land borders?
If government bans car importation through land borders, they should reduce the stress at the seaports. Those people going through the land borders can easily go to the seaports if the stress is reduced.
Are you saying that clearing fees and duties are outrageous at our seaports?
That is all we are saying and it has not come down one bit. This is what drives people to Cotonou. It is due to the cost of clearing and duties. Clearing is cheaper in Cotonou than it is here. As a government, why can’t we make clearing cheaper for importers and then government can in turn make more money?
As a company, is it okay by you to have government retain that decision or rescind it?
I want government to retain that decision of having cars come through the land borders. By banning it, we have been selling our rights to different countries. We have been boosting their economies. If we have 10 importers who feel that it is better to go through the seaports, the money they would pay as duties goes straight to the purse of the government.
Are cars really cheaper from Cotonou?
Yes, cars are very cheap from Cotonou. The point is that the prices are almost the same but the rate of clearing over there is very affordable and that is why we can have it from here. If a car sells for N1.2million naira here, you can easily go to Cotonou and get it down here with N1,050,000. The N150,000 you save makes a lot of sense.
Is it okay to buy tokunbo cars almost at par with new ones?
The best thing is to get the new ones. When you cannot afford it, then you can buy tokunbo cars. Before finally banning tokunbo cars, let’s wait till our local production of cars is boosted. That is when you can ban fairly used cars.
Is price the only factor that determines the choice of tokunbo cars, over new ones?
Yes, that’s the major reason. If you go for tokunbo, you also have value for your money.
Some believe that the so-called tokunbo cars were involved in accidents and are merely refurbished here in the country for sale. What would you say to that?
In every business, there are the black marketers. If our laws are active, there is no way some would be somewhere refurbishing such cars and branding them tokunbo. The issue is that buyers are warned to get their cars from licensed car dealers.
What is the contribution of your line of business to the country’s GDP?
We pay our duties regularly. If the government were managing well, that would contribute a lot to the GDP. I cannot say an exact figure now. It is a big sector that we can’t overemphasize. Basically, we have billionaire car dealers.
What should government do in the area of restructuring the sector?
A lot can be done. Someone can just wake up in the morning, park a car in front of his house and call himself a car dealer. Government should find a way of reorganizing the system and enforce a law that makes every car dealer registered. It would really make the system unique. We can also organize car trade fairs. That may be in just three states.
Does it not bother you that government only patronizes a section of your industry?
It bothers us. Government has led us to where we are in this country. We expect them to have preference for certain cars but others should be patronized too and that would encourage us. We spend a lot of money in bringing these cars from abroad. Anyway, we still have individuals and companies coming to patronize us.
What’s the volume of jobs that can be generated through this line of business?
It all depends on the amount of money you invest. No matter how small you start, you still need to employ people.