THE traffic jams in Lagos are legendary. In the hours spent on the city’s roads, there is plenty of time to view the array of cars of every imaginable make and age that clutter the roads.

Nigeria is crammed with imported cars from every region of the world. The government has estimated the import bill to be more than R30bn a year. Unlike in South Africa, nationals are allowed to import used cars that are up to 15 years old, contributing to the congestion that is a hallmark of Nigerian cities, not just Lagos. But despite the huge market and obvious demand, there are few automotive manufacturing or assembly operations.

In the 1970s, the government tried to build a car industry. It formed partnerships with companies including Peugeot, Volkswagen, Fiat and Daimler-Benz. By the 1980s, most of the companies had stopped operating because of poor domestic patronage, low capacity utilisation, a high-cost environment and a failure to implement the automotive policy of the time. Only two survive, running at a fraction of capacity.

Nigerians then turned to imports, including used cars. Spare parts companies went out of business because of high costs and competition from smuggled imports.

Dunlop and Michelin had plants in Nigeria. They, too, are gone.

Now Nigeria wants to reignite its motor industry and get the sector to underpin a new industrial era. There is undoubtedly a market and the government claims it has identified the pitfalls of past attempts and will address them. The 10-year automotive policy launched a few weeks ago includes a phased ban on used cars and high tariffs to discourage imports.

Many of Nigeria’s rich and powerful have built good businesses on the failed car industry and Nigerians’ reliance on imports. They have, unsurprisingly, strongly objected to the new policy. Emerging indigenous car companies are already enjoying government patronage.

The failure to break the business cartels that import everything from generators (a $1bn industry) to foodstuffs has been a brake on economic reform and industrialisation. But Trade Minister Olusegun Aganga hopes to change all that through direct policy intervention, starting with the motor industry. He has drawn on the experiences of India and Brazil and also South Africa in devising the policy.

During the Nigerian state visit to South Africa in May, a memorandum of understanding was signed to secure South Africa’s input into the policy, including technical assistance and sharing information about South Africa’s own policies.

Aganga has also approached global car manufacturers, including South African-based Nissan and Toyota, to persuade them to set up in Nigeria, a country to which they export vehicles at present. Nissan, in its alliance with France’s Renault, has already pronounced its interest in starting vehicle assembly of semi-knocked-down kits with its exclusive Nigerian distributor and, in time, using its first-mover advantage to make the country an automotive African hub.

But the issue of government picking winners for economic development is controversial. In Nigeria, where industries targeted by previous governments for intervention have been costly failures, there is reason for caution. It will be a while before a critical mass of "made in Nigeria" cars is reached. Meanwhile, the price of imported cars will soar as the onerous tariff regime kicks in. There may also be negative unintended consequences in other areas of the economy.

There are many reasons industrialisation has not taken off in Nigeria. The biggest of these is the lack of political will to make deep structural changes to remove the inherited dysfunction embedded in the economy.

A more competitive operating environment, coupled with the size of Nigeria’s — and West Africa’s — underserved markets, should be enough incentive to get investment in industrial enterprises.

• Games is CE of Africa @ Work, a consulting and advisory company.