SMEDAN, JAC Motors move to cut SMEs’ transport costs

The Small and Medium Enterprises Development Agency of Nigeria and Elizade JAC Motors are developing a financing scheme to enable small businesses acquire light-duty trucks.

The initiative is aimed at reducing the high transportation costs confronting small and medium-sized enterprises across the country.

Under the proposed scheme, SMEs will be able to access trucks ranging from 1.6 tonnes to 10 tonnes.

The vehicles will be available in petrol, diesel, hybrid and compressed natural gas options.

Speaking at an engagement in Lagos, the Chief Operating Officer of JAC Motors, Arvind Bhardwaj, said the initiative was designed to help SMEs move away from dependence on hired vehicles and ageing second-hand trucks.

Bhardwaj said the arrangement would enable small businesses to own logistics assets rather than continually paying third-party transporters.

He said JAC Motors’ assessment of the total cost of ownership showed that the seemingly cheaper option of buying used trucks could become more expensive over time.

According to him, an SME could spend about N8.7m more over five years on a used truck than on a new one.

He said the additional costs included maintenance, repairs, tyres, batteries and other associated expenses.

Also speaking, JAC Motors’ Senior Brand Manager, Olumide Olaokun, said the company’s 1.6-tonne truck was available in petrol and hybrid CNG variants.

He added that the 3-tonne, 5-tonne and 10-tonne models were diesel-powered.

Olaokun said the hybrid CNG variant could travel about 120 kilometres on a tank.

He, however, noted that its operating cost would largely depend on the availability of CNG infrastructure and the price of the alternative fuel.

Under the proposed financing arrangement, customers would make an initial contribution and obtain financing for the balance through participating banks.

One financing model presented at the engagement involved a 20 per cent initial contribution, 25 per cent annual interest and a four-year repayment period.

Under the illustration, monthly repayment for the 1.6-tonne truck was projected at less than N800,000.

Another option would allow prospective buyers to pay 10 per cent to reserve a vehicle while the bank processes financing for the balance.

The South-West Zonal Coordinator of SMEDAN, Olukayode Shode, said access to productive assets remained crucial to strengthening the capacity of SMEs.

Shode said the initiative aligned with efforts to improve access to finance and productive assets for small businesses.

“The initiative aligns with the government’s broader SME development agenda, particularly improving access to finance and productive assets,” he said.

“For many small businesses, transportation is a high operating cost, and solutions that enable SMEs to own productive assets can help reduce operating constraints, improve productivity and support sustainable business growth.”

The proposed scheme is expected to give SMEs an alternative to relying heavily on hired transporters while improving their capacity to own and operate logistics assets.