In this interview, Dr. Kayode Farinto, former Acting National President of the Association of Nigerian Licensed Customs Agents (ANLCA), speaks on the Federal Government’s Green Tax policy, reduction in import levies on vehicles, exchange rate stability, the National Single Window project and other sundry economic reform issues.
“We have never seen a government that listens as much as this one”
“Today, the naira is more stable, exporters have greater confidence, and businesses can plan more effectively”
What is your assessment of the Federal Government’s decision to reduce the Import Adjustment Tax on vehicles and introduce the Green Tax?
I have been involved in advocacy for over 15 years and I must say we have never seen a government that listens as much as this one. We had consistently advocated for either a reduction or total abrogation of the 15 per cent levy on imported vehicles. The government came up with what I consider a better alternative. Instead of maintaining the 15 per cent levy, it reduced it to five per cent and introduced a Green Tax of between two and four per cent depending on the engine capacity of the vehicle.
This is a welcome development. The truth is that advanced countries have long implemented similar environmental taxes. Nigeria is actually overdue in introducing such a measure. A few years ago, while attending a dangerous goods course in London, I drove a Mercedes-Benz 190 and had to pay a significant environmental charge because the vehicle did not meet modern emission standards. Such practices are common globally. Therefore, the Green Tax should not come as a surprise.
Some Nigerians fear that the Green Tax will increase the cost of vehicle importation. What is your view?
We need to look at the bigger picture. Previously, there was a 15 per cent levy on imported vehicles. That levy has now been reduced to five per cent. If a vehicle attracts a two per cent Green Tax, you still have a net reduction in the overall duty burden. In practical terms, import duties on vehicles have come down. What the government has done is use one stone to kill two birds. First, it has reduced the burden on vehicle importers. Second, it has aligned Nigeria with international environmental standards aimed at reducing carbon emissions. So, whether people like it or not, the overall duty burden has reduced.
Is the Green Tax policy in line with global best practices?
Absolutely. It is obtainable in many countries across the world. Countries are increasingly discouraging the use of older, high-emission vehicles because of their impact on the environment and the ozone layer. The Green Tax is simply a way of encouraging cleaner transportation options. What many Nigerians may not know is that the Federal Government currently grants duty waivers on electric vehicles. If you import an electric vehicle and apply through the appropriate channels, you can obtain approval for zero import duty. I have personally facilitated this process for importers on several occasions and the approvals were granted. You may still pay certain statutory charges, but not customs duty.
Can you explain how the Green Tax applies to different categories of vehicles?
The policy is based largely on engine capacity. For regular vehicles such as Toyota Corolla or Toyota Camry models with lower engine capacities, the Green Tax is generally around two per cent. For luxury vehicles and larger Sports Utility Vehicles (SUVs), which typically have engine capacities above 3.0 litres, the surcharge is about four per cent. The logic is simple. Luxury vehicles consume more fuel and emit more carbon. Therefore, they attract a higher environmental surcharge.
You have expressed concerns about the growing importation of accidented vehicles. Why?
The reality is that Nigerians’ purchasing power has declined significantly over the years, making accidented vehicles attractive because they are much cheaper. Take a Ferrari as an example; a brand-new Ferrari could cost $60,000 or more, while an accidented version may be available for as little as $15,000. Once imported into Nigeria and repaired, both vehicles appear identical on the road. The cost difference can exceed 65 per cent. In some cases, it is much higher.
I recently saw a Ford Bronco valued at about $85,000. An accidented version was available at auction for around $12,000. Even after repairs, the owner could still save a substantial amount. Nigeria also has highly skilled mechanics and relatively low labour costs, making it easier and cheaper to refurbish accidented vehicles compared to many developed countries. From my assessment, as much as 45 per cent of vehicles on Nigerian roads, particularly luxury vehicles, may have originated as accidented vehicles.
Has the stability in the foreign exchange market helped reduce import costs?
Without a doubt. One of the major challenges Nigeria previously faced was the existence of multiple exchange rates. That created distortions and uncertainty in the economy. The current administration moved towards a unified exchange rate system. Initially, I doubted it would work, but I have been proven wrong. Today, the naira is more stable, exporters have greater confidence, and businesses can plan more effectively. Predictability is extremely important in international trade and logistics. The World Bank’s Logistics Performance Index places significant emphasis on predictability. Importers and investors need to know what to expect when making business decisions. The improved exchange rate stability has helped reduce costs and strengthened confidence in the economy.
Yet many Nigerians say they are not feeling the impact of these improvements. Why?
There is a difference between macroeconomic performance and microeconomic realities. At the macroeconomic level, several indicators are improving. However, those gains have not fully translated into relief for ordinary Nigerians. Part of the challenge is that many businesses are driven primarily by profit motives. In some cases, prices are artificially inflated through hoarding and market manipulation. Government intervention through strategic grain reserves and food security initiatives is helping, but there is still a need for stronger monitoring and enforcement mechanisms. We also need attitudinal change. Economic reforms alone cannot solve every problem if market participants continue to engage in practices that undermine consumers.
What is your assessment of the National Single Window project since its launch?
I must confess that I was initially skeptical about the National Single Window. However, what I have seen so far has been encouraging. Recently, users were informed ahead of time about a scheduled system integration and maintenance exercise. We received notifications before the process started and were informed immediately after it was completed.
When business resumed, transactions continued seamlessly. That is how a modern trade facilitation platform should operate. In my view, the National Single Window is currently performing better than B’Odogwu in terms of communication and user engagement. I am presently working on a book that includes a comparative analysis of both platforms, and I believe stakeholders will find the conclusions very interesting.
What are your expectations from the Comptroller-General of Customs following the extension of his tenure?
Frankly speaking, I do not have any additional expectations because he has already demonstrated remarkable leadership. Whether people agree or not, he has added significant value to the Nigeria Customs Service. The reforms introduced under his leadership have positively impacted trade facilitation, revenue generation and stakeholder engagement.
What should the Nigeria Customs Service do to improve the B’Odogwu platform?
Every technology platform has challenges, and B’Odogwu is no exception. There are several issues that need to be addressed, particularly around system performance and user experience. The most important thing is for Customs to remain vigilant, continue improving the platform and respond quickly to stakeholder feedback. Technology evolves constantly, and continuous improvement is the key to success.
