Steve Agbota, [email protected]
When the Federal Government raised the age limit of vehicles from 10 years to 15 years in 2010, the intention was to curb dumping of over aged and outdated vehicles into the country.
The directive clearly stated that vehicles manufactured in 2004 and below were not to be allowed into enter the country and should not be cleared by the Nigeria Customs. That was because over aged and accidented vehicles were considered not eco-friendly in Nigeria.
To make the directive work, a new auto policy was introduced during the administration of erstwhile President Goodluck Jonathan in 2013 with the aim of boosting local production, which prescribed 35 per cent customs duty on imported used vehicles and 35 per cent levy and 35 per cent customs duty for new vehicles, which makes it 70 per cent.
Since then some stakeholders believe the policy has done more damages than good to the nation’s economy at large as most Nigerians could no longer afford new and good vehicles. Even so no new local vehicle plants has been launched in the country since then outside Innoson, who is also struggling to break even in the country.
So far, the policy has been fueling of smuggling of cars through the land borders as importers deliberately avoid Nigeria’s seaports and divert their cargoes to other neighbouring countries especially Benin Republic where they pay less than 10 per cent import duty and look for means of smuggling their vehicles into the country.
In the light of this development, Nigerian importers who could not go through the other neighbouring ports now abandoned importation of new and under aged vehicles for over aged and damaged used vehicles from Europe and America.
Today, the two biggest vehicle import terminals in Lagos, PTML Terminal and Five Star Logistics Terminal are now flooded with more damaged, accidented and relatively low grade vehicles compared to what were being imported between the 2012 and 2013.
Since damaged vehicles get rebates, over aged vehicles pay lesser customs duty to the Nigeria Customs Service (NCS), which however affects the revenue target of the service.
A visit to the largest auto market in Nigeria, Berger Auto Market Apapa and other auto marts in Lagos shows that 70 per cent of the vehicles displayed are over aged, while larger numbers are accidented vehicles repairedand displayed for sale.
In the past four years, stakeholders, dealers and importers of all shades have been calling on the government to reverse the policy. Up untill now, nothing seems to have changed or been done to address the issue.
Stakeholders who spoke with Daily Sun said the auto policy has made importation of vehicles into Nigeria more expensive than before, and is also hurting the revenue targets for Customs Service by the Federal Government which has consistently dropped over the years. They said not everyone can afford vehicles due to the government auto policy that has jacked up the taxes and levies on vehicles, which is the reason why Nigerians resort to accidented and over aged vehicles. They said the situation was so bad that most corporate organisations have resulted in buying fairly used vehicles because the new ones are more expensive than ever before.
Also speaking with Daily Sun, Director General at Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said that initially, the policy was that any vehicles older than eight years should not come into the country. According to him, what is important is to ensure that those who are supposed to enforce the law do their work properly and if they are not doing it as expected then sanctions should be applied..
It is very clear, if this is the law but I think that any vehicles that more than 10 years should not really allowed into the country. We have to be firm about policies. Right now, I think the policy is a big loss. We have to firm up the policy and set the age limit to about 10 years so we have the country being turn into another junk yard where people are dumping all sort of things posing all sort of risks.
“Secondly, government should review the tariff on vehicles because 35 per cent tariff is too high, and that is why people go for these junks because of affordability problem since they cannot afford better quality vehicles. So if you reduce the tariff to about 20 per cent, people will be able to bring in more quality vehicles.”
He said the purchasing power is not there and average Nigerians, the middle class are struggling to buy vehicles. The LCCI boss observed that if government is able to reduce the tariff from 35 per cent to about 20 per cent, it will also help to improve the situation and make it easier to enforce whatever regulations it has against the old and rickety vehicles being imported into the country today..
Yusuf said: “We have to strengthen the institutional capacity to enforce compliance, and so we need to reduce the age limit to about 10 years, we need to reduce the tariff so that more decent vehicles so that more decent vehicles can be affordable to the average Nigerians. The tariff on new vehicles is 70 per cent, and this is outrageous. These are some of the policies we should get the government to change.”
Meanwhile, the spokesman of Seaport Terminal Operators Association of Nigeria (STOAN), Bolaji Akinola, said that the issue has to do with the function of the economy, adding that if people have their ways, everybody will buy new vehicles.
Said he: “I mean everybody will rather buy new vehicles even if they are buying fairly use, they will buy something that is fairly new. People settle for overaged vehicles because the low purchasing powers of Nigerians.
“If you want to buy a new vehicle, probably you will be looking at the range between eight to ten million for a good vehicle. How many people can afford that? Even Toyota Camry for instance, if you want to buy a new one, you are looking at close to N10 million. How many people can afford that in Nigeria of today? If you wants buy an SUV like Prado Jeep, you’re looking at over N20 million depending on the type. How many people can afford that? So then people settle for overused vehicles.”
In addition to the 70 per cent high tariff charged by Customs, he said new vehicles are becoming more or less unknown to many Nigerians hence they settle for over aged vehicles which are cheaper. Sometimes, he said they even go for accidented vehicles so that they will spend less because of their low purchasing powers.