Lagos, June 6, 2018  (AltAfrika) – PSA Peugeot Citroen plans to start assembling cars in Nigeria by first quarter of 2019, via a joint venture with Africa’s richest man Aliko Dangote and five state governments, one of the local partners told Reuters.

The joint venture, Peugeot Automobile Nigeria (PAN) Ltd, will assemble 3,500 units in its first year and ramp up to about 10,000 units, said Jimi Lawal, adviser to the governor of Kaduna, the northwestern state where the plant will be located.

The auto market in Africa’s most population of 190 million people has huge potential but only a small number of new vehicles are sold annually. Limited bank financing and the absence of an industrial policy has stunted growth in a sector dominated by imported used vehicles.

“The first vehicle should come out by the first quarter of next year. We are hoping that the factory will be completed by December,” Lawal told Reuters in an interview. “The land has been identified … we have advertised for a contractor that will build the factory,” he added.

Peugeot has said it would build its 301 sedan in small volumes at a plant operated by PAN. The vehicles will be produced from semi-assembled kits of parts shipped from Peugeot’s plant in Spain.

Nigerian production of additional models such as the 308 compact and 508 may follow later, Peugeot has said.

Africa’s richest man will hold a majority stake in the joint venture which is with five Nigerian northern states. Peugeot Citroen will own a 10 percent stake in the local joint venture company and operate the plant, Lawal said.

The northern states which include Jigawa, Kebbi, Katsina and Kano would provide off-take for cars built at the Kaduna plant, said Lawal.

“Negotiations are still ongoing,” Peugeot said, without providing details.

Dangote, in alliance with two states and the Bank of Industry (BOI), made a bid to acquire a majority stake in PAN after the state-bad bank AMCON sought to sell some of the assets it bought in the wake of the banking crisis in 2009.

Dangote and the state governors have visited France to sign agreements, said Lawal who added that Peugeot would assemble three ,brands in Nigeria and target West African markets for export.