The upward review of tariff on imported fairly used vehicles popularly called tokunbo, announced recently by the Federal Government is not going down well with many Nigerians who believe the measure was not properly thought out.
The Minister of Trade and Investment, Olusegun Aganga, two weeks ago, announced that a new tariff on the importation of cars had been approved by government.
Aganga said the move was aimed at making imported cars more expensive thus promoting the purchase of locally manufactured vehicles. He said the new policy was part of measures to develop the Nigerian automotive industry.
“The importation of tokunbo vehicles will not be a major threat to the automotive development plan. The tariff for the importation of cars has been reviewed upward and will be announced soon,” Aganga had told journalists during a press briefing in Abuja.
He said the intent of government was to raise tariff on importation of vehicles with a view to discouraging the influx of used vehicles into the country while also encouraging local manufacturing.
The new automotive policy, however, is generating apprehension among Nigerians despite a nod given to it by the House of Representatives Committee on Industry.
The representatives last Thursday approved the proposal of tariff increase on imported cars.
The committee said that with the increase on tariff of imported cars, businesses of local automotive manufacturers will not only be encouraged but will also be protected.
“The House Committee on Industry is very insistent on the fact that anybody who is going to import a complete car is going to pay a higher tariff than somebody who is going to manufacture here because that is the only way that you will be able to protect who is going to create employment here,” Chairman of the committee, Mohammed Onawo, said when the committee paid an oversight visit to the Ministry of Industry, Trade and Investment.
During a live phone-in programme on Ships & Ports on Radio Nigeria One 103.5FM, Lagos on Friday, all the callers were unanimous in their opposition to the new government policy.
One of the callers on the programme who identified himself as Julius Akanni said that unless the capacity of local automotive manufacturers is increased and well established through constant power supply and provision of other infrastructural facilities, it will be impossible for them to meet local demand for vehicles.
“It is not a matter of just coming up with policy; how do you encourage manufacturing in the country? Let us ensure that power and everything is in place. Majority of Nigerians cannot afford new vehicles. So government needs to consider a lot of factors. It is too early to increase tariff on imported vehicles. They should ensure that they have the capacity to meet demand before banning or increasing tariff on imported vehicles,” Akanni said.
Another caller who simply identified himself as Mr. Ogodo said that a decrease in the importation of used vehicles will make life difficult for Nigerians as most of them cannot afford to buy new ones.
He said: “A similar thing was done in the past which I can remember. What happened was that they simply put the income that would have come from the duties of these import into the pocket of smugglers and unofficial channel because for me there is no legislating the market economy. The forces of supply and demand will be in control. Majority of Nigerians depend on roads for transport which is a significant portion of the cars or vehicles that we are using these used vehicles for and the only reason why they are being purchased in Nigeria is because it is what people can afford. I think tackling the supply side for road transport should be the primary objective.”
One Emmanuel, who also called into the programme, said the new automotive policy is a welcome development but he frowned at the timing of its implementation.
“I think it is a perfect idea but wrong timing. They haven’t started manufacturing new cars in Nigeria so why would they want to increase duty. We need to know how much these vehicles will go for when they start manufacturing them. Are they going for the same price range as the fairly used cars? Whether we like it or not, looking at the general roads of today we have about sixty to seventy percent of used cars, compared to the new ones because this is what people can afford. If you think manufacturing cars is a good idea, fine I love that. I also like to use a new car but can it be compared to the ones they are importing from America or Cotonou or wherever they are bringing them from? Let’s see how the manufacturing of these cars goes before they talk about increasing duties or stopping the importation of used cars”.
A different line of thought came from a caller who identified himself as OM.
OM was of the opinion that rather than go into full scale production of vehicles, the local automotive manufacturers should be encouraged to go into manufacturing spare parts first noting that the problem of unsteady power supply is one that must be solved before the local automotive manufactures take on the huge task of going into full production of vehicles.
“There are fundamental issues that need to be addressed before the local manufacturing of vehicles. One is the power issue because without power, I doubt if the entire business can really thrive. Then the other aspect is why don’t you consider manufacturing spare parts and see how we do. The spare parts we use are brought in from outside the country and if we want to buy new ones they will say this is fake go and buy tokunbo. Why can’t we bridge that gap? If we can start with that with the amount of power we have now let’s see how we can cope,” OM stated.