This Automotive Policy Must Be Reviewed

Like torrents, the clamour for a review of the National Automotive Policy is gathering momentum.  As if they were all waiting for a prompt, after the appeal from the Comptroller General of Customs; Col Hameed Ali (rtd) to the Federal Government, several stakeholders have joined their forces to calls for the same.

We recall that the Customs CG specifically urged the Federal Government to reduce the levy on imported brand new vehicles from 35 per cent to 10 per cent.

Ali explained that the auto policy had discouraged importers as they had diverted their importations to neighbouring countries.

He said that the policy had also heightened smuggling, hence reducing the revenue the service would have generated

In his opinion, even though the policy was put in place to encourage local automobile industries,  but that seems to be difficult to achieve.

Prior to the recent call by the Customs boss, her counterpart in the Nigerian Ports Authority (NPA); Hadiza Bala Usman had mid last year, called for the review of the controversial policy, saying that it has caused revenue loss on car importation into the country to drop by 20 per cent in 2018 alone.

She stated that contrary to government’s expectations, the policy had not achieved its objectives; while on the other hand, it continued to lose revenue that would have ordinarily accrued from car importation.

She went on to ask a very germane question which borders on one failed area of the policy, which is to encourage local assembly of vehicles. She asked: How many cars are being manufactured and how many Nigerians can really afford or buy the brand new cars?

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 2012to 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.

The policy led to a hike in tariff, leading to a reduction in the number of vehicles brought 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 six years.

Reacting to the development, customs agents in the country advised the federal government to reduce tariff on brand new vehicles and maintain tariff on used one to spark off massive importation through the seaports.

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.

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.

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

After almost five 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.

We recall that at the peak of its campaign in 2015, before the general elections, the All Progressives Congress (APC) promised to review the policy. It is instructive that its Vice Presidential Candidate then; Prof YemiOsinbajo pointed said that the policy would not only ne reviewed, but that duty would also be reduced.

The APC has been in power for about four years and it is surprising that it’s at the tail end of its first four years that the kite of reduction is again been flown, by no less a person than the CG of Customs who is a frontier member of the APC and a confidant of  President Muhammadu Buhari.  

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