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EFFECT OF TARIFF LAWS ON THE AUTOMOBILE INDUSTRY IN NIGERIA. A CASE STUDY OF ANAMBRA MOTOR MANUFACTURING COMPANY (ANAMMCO)

EFFECT OF TARIFF LAWS ON THE AUTOMOBILE INDUSTRY IN NIGERIA. A CASE STUDY OF ANAMBRA MOTOR MANUFACTURING COMPANY (ANAMMCO)

ABSTRACT

          This work aimed at studying critically the country’s automobile industry from the point of view of the tariff structure applicable to it,  the objective being to identify any short comings in such polices that may  be instrumental  to the apparent  lack of growth in the sector.

Most of the companies in the sector the federal government owned companies founded about the same period with basic characteristics of foreign input orientation and as such experience the same problems for effectiveness therefore, the researcher concentrated on a company Anambra Motor Manufacturing  Company (ANAMMCO) .   Conclusively,  recommendation were made on how to improve the general performance of the automobile industry in Nigeria.

 

LIST OF TABLES

Table 4.1    (i) Age distribution  of Respondent


Table 4.1    (ii)     Length of service of respondents

Table 4.1    (iii)    Staff and the Grades

Table  4.1   (iv)    Division  of the Respondents

Table 4.1    (v)     Major objective for Auto plant Establishment in           Nigeria

Table  4.1   (vi)    Extent to which objective have been  achieved.

Table 4.1    (vii)   The Greatest obstacle to Growth

Table 4.1    (viii)  Rating of Government Tariff policy

Table 4.1    (ix)    Who initial the change in Tariff policy?

Table  4.1   (x)     Tariff policy in the past ten years

Table 4.1    (xi)    Time period of consistency/ inconsistency

Table 4.1    (xii)   Effect of consistency/inconsistency company’s

REVENUE.

Table 4.1    (xiii)  Period  of Higher revenue

Table  4.1   (xiv)  Frequency of change of Tariff policy

Table 4.1    (xv)   Rate of production when Tariff on FBU was High.

Table  4.1   (xvi)  Level  of sales when Tariff on FBU  was high

Table 4.1    (xvii) Sales condition when Tariff on FBU   is low

Table 4.1    (xviii)          Average Height of Tariff on CKD

Table 4.1    (xix)  Production when Tariff on CKD was high

Table 4.1    (xx)   Production when Tariff on CKD was low

 

PROPOSAL ON THE TOPIC: The effect of Tariff law on the Automobile Industry in Nigeria  (case study of Anambra motor manufacturing company (ANAMMCO)

This research work is aimed at studying critically the country’s automobile industry from the point of view of tariff structure applicable to it; the objective of this work will be to identify any short comings or problematic areas in the aspect of fiscal pollicies, which may be instrument to dealer growth and development of the sector.

This  work will also look into the effectiveness and efficiency of this companies in automobile industries and also compare the fax structure applicable in Nigeria with those other country in the  same industry.

Most of the companies  in this sector are federal government owned companies founded about the same period  with basic characteristics of foreign input orientation and as such  experience the same problems.  Therefore for effectiveness, I  will  be concentrating on a company (ANAMMCO) Anambra motor manufacturing company.

Conclusively, recommendation will be made on how to improve generally the performance of automobile industry in Nigeria.

CHAPTER ONE

  • INTRODUCTION 1


1.1     BACKGROUND OF THE STUDY                     1

  • STATEMENT OF PROBLEM 3

  • PURPOSE OF THE STUDY 3

  • RESEARCH HYPOTHESIS 4

  • SIGNIFICANCE OF THE STUDY 4

  • SCOPE AND LIMITATION OF THE STUDY  5

  • HISTORICAL BACKGROUND OF ANAMMCO6

  • DEFINITION OF TERMS                                  10


 

CHAPTER  TWO

  • REVIEW OF RELATED LITERATURE           11


2.1     DEVELOPMENT OBJECTIVES AND -

INDUSTRIAL POLICIES                                    11

  • GOVERNMENT POLICY AND GROWTH OF –


AN INDUSTRY                                                            14

  • FISCAL POLICY IN LESS  DEVELOPED –


COUNTRIES                                                                 21

  • CURRENT NATIONAL FINANCE POLICIES AND THE MANUFACTURING SECTOR                       23

  • THE WEAPON CALLED TARIFF                              26

  • MOTOR ASSEMBLY PLANTS AND –


TARIFF LAWS                                                             28

CHAPTER  THREE

  • RESEARCH DESIGN AND METHODOLOGY 40


3.1     AREA OF STUDY                                              41

  • SOURCE OF DATA 41

  • METHOD OF INVESTIGATION 44

  • VALIDITY AND RELIABILITY OF MEASURING INSTRUMENTS                              46


 

CHAPTER FOUR

  • DATA PRESENTATION AND ANALYSIS 48


4.1     PRESENTATION AND ANALYSIS    OF THE QUESTIONNAIRE                                             48

  • TEST OF HYPOTHESIS 69


CHAPTER FIVE

  • FINDINGS, CONCLUSIONS AND RECOMMENDATIONS


5.1     FINDINGS                                                                    78

  • CONCLUSION 79

  • RECOMMENDATION 82


BIBLIOGRAPHY                                                          88

APPENDIX                                                                   91

QUESTIONNAIRE                                              92

 




CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Automobile  industry is one of the most crucial industry for  economic development and  growth, particularly f or a developing nation  Nigeria.  Every dynamic. Economy requires a viable and efficient  transport sector, for the movement of goods, people and service.  In a situation where  the  transport sector is not  services causes huge losses to the nation  every year through  insufficient utilization of man- hours (Chika Emerenwa, 1990).   It is a well known fact that only a few other industries cover such a wide range of  technology and manufacturing processed or utilize such variety of raw materials tools, machinery and equipment as the automobile industry therefore the automobile industry employs the highest percentage of our human and natural resources .  This is the more reason  we say that the sector  serves as an engine room of economic growth and development.  It also serves as a stimulus for the development of other industries in the economy, like iron and steel, industry, machine  tool industry as well as the transportation industry.

An industry which  serves and  the engine of technological            fake – off of any nation should be closely monitored through the use of appropriate tariff laws, to maintain sustainable growth in  the sector thereby stimulating economic growth  and development in the economy in general.

A critical look at the tariff policies or fiscal polices on commercial vehicles under which  Anambra motor manufacturing company  (ANAMMCO) falls will be our minor or  guide to show that     for the past eleven years, no consistent polices  aimed at any definite objective have be experienced.  The growth of the industry  were evidence  except form 1991 –1994 and between 1997 to date the difference in the duty between 1997 to date the difference in the  duty between completely knocked  down (CKD) parts and fully built unit (FBU) was  up to 40% the difference in duty for the  rest of the year was too marginal to enable locally produced vehicles  to  compete effectively with imported fully built units.

In the days of structural  adjustment programme (SAP), it caused a bound or problem in the sector  because some companies found it more economically and profitable to import  fully                      completed unit (FBU) to sell them to  import completely knocked down part   (CKD) to produce and sell.   This trend does not only create idle  capacity  but also loss of jobs   for many  workers, and more importantly, it negates and deters the over all objective of technological transfer which  inform discourage economic growth and development.

1.2     STATEMENT OF PROBLEMS

The problems of conflicting and discontinuity of government polices on tariff law as they concern local automobile industry.  The high  tariff on CKD and low tariff and low tariff on FBU  the former managing director of ANAMMCO Hansyemgen Ahlbrecnt said “one of the greatest problem  of the automobile industry in  Nigeria is that are  (automobile manufacturer)  are not getting enough or adequate support from the government (ANAMMCO  News 1990)”

 

1.3     PURPOSE OF THE STUDY

This study is aimed at looking into the automobile industry in the light of the following:

  1. Investigating the nations Automobile industry from the point of view of the tariff polices of the government

  2. Attempting to portray, using figures, the part and role played these laws in the development of     Heave it been enhancing or hindering the growth of the industry.

  3. Recommending strategies that will ensure these laws to be an instrument for the  growth and development of automobile industry in Nigeria.

    • RESEARCH HYPOTHESIS




HO:   That inconsistency in tariff policy has affected company’s revenue.

Hi:    That  inconsistency in tariff policy has not affected company’s revenue

Ho:   Low tariff of FBU has negative effect on company sales

Hi:     Low tariff on FBU has positive  effect on company sales.

  • SIGNIFICANCE OF THE STUDY


The finding  and recommendation of the study will help to:

  1. Create an awareness on the part of the government as to what effective instrument, the tariff laws could be in sponsoring our automobile industry and hence developing the  allied industries as well as minimizing the nations transportation problem./

  2. Made suggestions for the survival and growth of the industry.

  3. Encourage those in the industry to view the unfavourable tariff laws as a challenge and become more aggressive in their survival efforts.

  4. Serve as spring board for further studies in the area of government tariff polices in general

    • SCOPE AND LIMITATION OF THE STUDY




This study   is concerned with  government tariff polices as regards to automobile industry, the researcher concentrated on ANAMMCO from the period of 1991-2001, In the pursuance of a successful completion of this work, certain  limitations posed some threats to the research. Among them are lack of adequate fund to meet rising cost of research, the dearth of books particularly local materials on the topic under discussion and also problem of data collection.

 

 

  • HISTORICAL BACKGROUND OF MB-ANAMMCO


Mercedes- Benz ANAMMCO is a joint venture between the federal government of Nigeria and  Diamler Chrysler AG. MB – ANAMMCO Manufactures commercial vehicles and leads in the commercial  vehicle market from five tons  payload and above in Nigeria.  The plant, which occupies sprouting 300,000 square meter site at Emene, near Enugu,  is a shining example of a profitable and viable economic and technological co-operation between the government and people of Nigeria  and Diamler Chrysler AG.

MB-ANAMMCO Limited was incorporated  on January 17,  1977 and the plant was commissioned on July 8, 1980 by the first executive president of Nigeria, Alhaji Shehu Shagari.  It started official production in  January 1981 and has to date made an enviable mark on the nations industrial growth adding over 25,000 vehicles to the nation’s transport sector, backed up effectively with a network of over 36 after- sale services  stations and spare parts supply depots.  The company’s  central spare  part depot  Enugu stocks   over 35000 line items.

PRODUCT RANGE:

With management characterized by immolation based on  continuous research, the company has successfully deviated from its original   mono product of mercedes- Benz  truck, to  other types of vehicles.  Today the company’s product range includes.

BUSES:

MBO 140

MBO 800 Standard/ Luxury

MBO 1418

MBO 400 (Luxury bus)

TRUCKS:

L 711

L 1621

Actres

Unimog

 

SPECIAL VEHICLES

Fire fighting vehicle

Mobile clinic

Ambulance

Refuse Disposal vehicle

Septic  Tank extractor

Fuel/water Tankers/ fire fighting water Tanker.

Towing trucks

Troop Carrier

Bullion Vehicle

Dropside Body

Cooling Box  Van

Black Maria

Produce Vehicle

This products are not only manufacture to high quality international standard but are also supposed will a full range of efficient after sales services.

 

DISTRIBUTION

ANAMMCO has a network of distributors located in all  work and cranny of  the country.  The distributors includes.

  1. Levant’s Motors & Technical (A divisions  of AG Levant’s  (NIG) PLC)   .



  1. Nigeria Motors Industries Limited

  2. Eken Dilichukwu Motors Limited and others


AUTHORIZED  AGENTS

  1. C Ifajekwku & Sons Ltd.

  2. Charles Daniel’s (Nigeria) Ltd.

  3. Zennia International Ltd.

  4. Famy Chuks Associates (N ig) Ltd.

  5. Young shall grow motor Ltd.

  6. Mesuda motor Ltd.

  7. New Tarzan motor Ltd.

  8. N Emerah & Sons Enterprises Ltd.

  9. Sunday Umeh & Sons Enterprises Ltd.

  10. Facbo International Ltd.

  11. Chisco International Ltd.


 

 

1.8     DEFINITION OF TERMS   

AUTOMOBILE INDUSTRY: This includes all companies engaged in manufacturing of vehicle in Nigeria using either completely knocked down parts only a combination of c completely knocked down and local material or all local.  Material  as many become possible in future.

DIVERSIFICATION: This is used to define the action of company, which hither to engage in a simple line of production, now producing a whole range of other lines.

VALIDITY: This is effective because it is made or done with the correct formalities.   The degree to which an instrument of research measures what it is designed to measure

INNOVATION: This deals with making changes by ways of introducing new ideas through creative thinking.

RELIABILITY: This is consistency of result when an instrument of measurement is repeatedly applied.

TARIFF: This is referred to as fiscal policy tools through the use of tax  on a particular class of imported goods.  Also it can be defined as a tax paid on goods coming into or going out of a country

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