Still On The Ban On Importation Of Vehicles Through Land Border 

From the statistics reeled out by the Nigeria Customs Service at the PTML terminal at Tin Can Island port, the Federal Government’s ban on importation of vehicles through land borders has increased the fortunes of the seaports by about 12.8 per cent. What this means is that since the ban took effect, more vehicles have been arriving at the country through the seaports.

Citing loss of revenue, the Federal Government had in December 2016 placed a ban on importation of vehicles through all land borders across the country, effective January 1, 2017.

Apart from Customs figures, the national president of Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu also agreed that the ban has increased activities in our ports.

“Yes, it has increased the activities in our ports. Gradually it was bad, because people feel they can afford to smuggle cars, but now it is increasing. There is competition among the dealers; that is what is happening in the vehicle importation business. Some of them take their vehicles to neighbouring countries before coming to Nigeria and they will still pay their taxes before proceeding to Nigeria.  The tax is called transit tax. That is aside what you will pay when you get to Nigeria. So why don’t the person come straight to the country”, he had told one of our correspondents.

Nigeria, like many African nations, is a vehicle importation-dependent economy; a business that is divisible into two broad categories, namely: new and fairly used vehicles.

Without mincing words, importation of used (Tokunboh) vehicles has been a lucrative business in Nigeria; both for Nigerians and for their relations abroad who ship those vehicles into the country.  

The National Automotive Council said that importers spent as much as $31.67 billion (approximately N6.3 trillion) on the importation of vehicles and motorised equipment in five years.

In Nigeria, there is a long chain of players, including the importer, the shipping lines, the clearing agents, the Nigerian Port Authourity, the terminal operators, the Customs, etc all of whom are directly connected (one way or the other) to the vehicle importation business.

At the peak of vehicle importation business, it is not unusual to see that, on daily basis, ships bring in new and used vehicles into the country through the nation’s seaports; in fact some ships and some terminals are already synonymous with that category of imports.

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

But, 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.

Perhaps acknowledging the status of Nigeria as a vehicle-importing nation, but determined to address this,  then-President Goodluck Jonathan said at the  World Economic Forum which held earlier in 2014 in Davos, Switzerland that : “The only way to reduce the preponderance of second hand cars on our roads is to produce good quality cars with affordable pricing locally”.

At the forum which also had in attendance some leading automobile manufacturers, the former President left no one in doubt that Nigeria’s National Automotive Policy has come to stay. He stated also that the objective of the new policy is to make new cars affordable to more Nigerians.

Nigeria’s market for new automobile is dominated by most of the global brands like: Toyota, GM, Nissan, Honda, BMW, Audi, Mercedes, Hyundai, Kia, Volkswagen, Skoda and a host of others. In the new cars segment, the market leaders are Stallion Group (owned by the international billionaire businessmen; the Vaswani Brothers that holds the exclusive sole representations for prime European, Japanese and Korean brands. But, in the used vehicle genre, brands like, Toyota and Honda are hot favourites.

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

No doubt, the ban has seriously and negatively affected vehicle importers whose vehicles have been intercepted and seized by Customs officers.

Some of these vehicles were seized in the garages where they were displaced for sale. Some were impounded at the home of their eventual owners, while some were seized on the highways.

Some of the policy directives have had to do with adjustment and re-adjustment of import duty on categories of vehicles to be imported and recently, the Nigeria Customs Service set up a committee to develop a road map on introduction of a uniformed value for imported vehicles into Nigeria.

We quite understand that the dual policy of first increasing tariffs on imported vehicles by as much as 70% and the follow-up ban on importation of vehicles through land border were aimed at discouraging importation and also assisting terminal operators which have complained of loss of patronage when the first tranche of the policy (higher tariff) was introduced.

We agree that a fully functional automotive policy will no doubt lead to gainful employment for many Nigerians. This is more so since the government said it is planning to create automotive clusters in Ogun and Lagos States, Kano and Kaduna States, Enugu and Anambra States.

Prior to the ban on importation of vehicles through land borders , Nigerian importers had complained that the dwindling exchange rate of the Naira to the Francophone countries’ CFA has made bringing in cars through Cotonou unprofitable. Why then do we have this cry about shutting our borders against importation of a particular product through Cotonou or land border?

We are quite aware that Customs at Seme border is losing revenue, because a large chunk of its revenue comes in through duty and other payments on imported vehicles. A similar fate befell Nigerian Ports Authourity (NPA) when the border enjoyed preference, especially in importation of rice and vehicles.

We are also take note of the approach of the Nigeria Customs Service which has seen its officials going to auto marts, homes and highways to impound imported vehicles.

 

While we are in support of any method that will yield more revenue  to government coffers , we are however not too comfortable with the commando style of seizing vehicles on the highways, especially vehicles that were cleared at the ports and which are already in the custody of their owners.

But again, some have argued that, there is indeed no alternative to importation of used vehicles. We disagree and maintain that here are, as evidenced by the vehicles that are now being assembled by a few of the auto assembly plants.

It is obvious that the policy of banning importation through the land border has paid off, if looked at from the perspective of operators of seaports, but ultimately government will still need to holistically appraise the auto policy, with a view to encouraging local assembly of vehicles.  Importation and local assembly should go on side-by-side. 

Once again, we support the ban, which we believe was borne out of the economic benefits that the policy would bring to the nation.  

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