Still On The Auto Policy And Influx Of Over-aged Vehicles Into Nigeria

Our investigations at the two biggest vehicle handling terminals in Lagos; that is, PTML Terminal and Five Star Logistics Terminal, as well as Africa’s biggest automobile market; Berger Auto Market in Apapa have revealed that 70% of the vehicles coming into the violate government’s automotive policy.

Even though the federal government had in 2010 raised the age limit of vehicles to be imported into the country from 10 years to 15 years, investigations also revealed that the Nigeria Customs Service is deliberately violating this trade policy of the federal government by clearing older vehicles from the ports.

Going by the government directive, vehicles manufactured in 2004 and below are not supposed to be cleared by the Nigeria Customs Service.

Confirming the influx of over-aged vehicles, General Manager of PTML Terminal, Mr Tunde Keshinro confirmed that the terminal is flooded with damaged, ‘accidented’ and relatively low grade vehicles.

He said here have been more of this grade of vehicles since the auto policy came into being.

Keshinro confirmed that importers now bring in low grade, salvaged vehicles, and these are equally older models rather than newer models. He said, relatively, majority of the vehicles being imported were manufactured before 2010.

It is a surprise that rather than see more of newer vehicles of 2013, 2015, 2017 and 2018, what comes-in are vehicles that have one defect or the other, and those that had one form of accident or the other. 

Prior to now, the challenge was that Nigerian importers were using Cotonou port in Benin Republic to smuggle vehicles into the country through illegal routes around Seme and Idiroko borders.

According to statistics released by the National Bureau of Statistics (NBS), a total of 1,216,131 used and new vehicles were imported into the country from 2012 to 2017.

The Bureau, in a report tagged, “Nigerian Ports Statistics, 2012 to 2017”, stated that the vehicles came through, Apapa, Tin Can, Onne, Calabar and Delta ports.

The report showed that vehicle importation into the country nose-dived in 2013, even though the federal government auto policy was introduced in 2014 by former President Goodluck Jonathan, with the aim of boosting local production.

According to the bureau, the policy led to a hike in tariff, leading to a reduction in the number of vehicles that were imported into the country.

Sadly, it failed to boost local production but instead fuelled smuggling through neighbouring Benin Republic.

From available records, the business of vehicle importation into Nigeria wasn’t very pronounced in Nigeria until the late 1970s when Nigerians started developing tastes for exotic cars.

Between 2000 and 2009, there was an upsurge in the purchase of new cars as banks opened their doors to the middle class who desired new cars; a development which threatened importers of fairly- used vehicles, but it appears that the fear no longer exists as both still enjoy a sizeable chunk of the market.

A deep look into the NBS figures showed that in 2012, 251,322 vehicles were imported while 265,209 in 2013 and 237,904 came into the port in 2014.

It showed further that in 2015, 124,841 vehicles were received at various terminals at Tin-Can port, 104,571 in 2016 and 180,753 in 2017.

The Tin-Can Port was followed by the Apapa port which received 48,937 vehicles in the year under review.

The Apapa port, received 17,121, highest number of vehicles into the country in 2012, followed by 14,397 in 2013 and 9,611 in 2014.

Even though, the Apapa port doesn’t have a designated vehicle terminal, the port recorded 6,955 in 2015 and paltry 346 and 507 in 2016 and 2017 respectively.

The eastern port which was known for receiving oil and gas cargoes also received a paltry 2,594 in six years.

Onne port received the highest in the eastern port from 285 in 2012 to 260 in 2013 and 106 in 2014, 196 vehicles were received in 2015, 272 in 2016 and 3 in 2017.

Delta port received 2 vehicles in 2015 and additional 658 in 2012, 360 in 2013 and 311 in 2014.

The Rivers Port received only 141 vehicles in 2017 while Calabar port received no vehicle in the last eight years.

But, apparently convinced about large scale smuggling of used vehicles and loss of revenue, President Muhammadu Buhari, in December 2016, placed ban on importation of vehicles through the land border.

In between the time that the auto policy was formulated and now, a lot of issues, related to policies and government interventions have come up.

Some of the policy directives have had to do with adjustment and re-adjustment of import duty on categories of vehicles to be imported.

After almost six years of test-running the policy, it is now obvious that a review is necessary. Rather than a reduction in duty or review of the age of used vehicles that can be imported, we call for a holistic review of the automotive policy.

The story of Ghana which embraced the same policy long after Nigeria is a clear departure from our experience as a nation.

The Ghanaian auto policy has not only brought auto makers into the country, it has also reduced the age limit of vehicles to be imported into Ghana.

The automotive policy the Ghanaian government had put in place will effectively rapidly phase out used car importation over the next three years.

The case with Nigeria is a clear departure from a viable and attractive automotive policy.

It is even shocking to say the least that, the policy does not have the backing of the law. This much was confirmed by the Director-General of the auto policy implementing agency; the National Automotive Design and Development Council (NADDC), Mr Jelani Aliyu.

He said, legislating the automotive policy will strengthen it, as well as prevent it from being changed by subsequent governments.

The fact is: the automotive policy is not about importation of vehicles. It is more about enhancing indigenous participation in the auto business through establishment of assembly plants in the country.

. It is more about developing the nation’s indigenous capacity and enhancing the growth of auto assembly plants in the country.

We think that the National Assembly should be prevailed upon to enact a National Automotive Act, that will legitimize the auto policy and encourage auto manufacturers to increase their investments in Nigeria.  

“It depends on whether the Ghanaian government will follow through exactly with what they are saying,” he said.

Schaefer said the company is setting up the initial phased SKD plant with an annual capacity of 5 000 units but plans to ramp this up to an annual capacity of 20 000 to 30 000 units soon.

The signing by the Ghanaian government of an automotive industrial policy about 10 days ago was crucial in Volkswagen proceeding with its assembly operation plans in teh country.

Schaefer said the Ghanaian automotive industrial policy was launched in Accra by the country’s minister of trade and industry on August 14 and approved by the government’s cabinet the next day.

 

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