Nigerians to pay more for fairly used cars from tomorrow

Buyers of imported fairly used vehicles popularly known as ‘tokunboh’ will have to cough out more money to buy their brands as the Federal Government’s 35% surcharge on imported automobiles come into effect from tomorrow, January 1, 2015.

The implementation of the 35% surcharge is part of the National Automotive Policy introduced by the Jonathan administration in November 2013.

The policy, according to the Minister of Industry, Trade and Investement, Olusegun Aganga, was aimed at discouraging importation and encouraging local production of vehicles.

But several interest groups including the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) have called on the Federal Government to delay takeoff of the policy because of its potential to inflict hardship on the masses.

National President of NACCIMA, Alhaji Badaru Abubakar while speaking in September, said the delay was necessary to enable stakeholders resolve the lingering controversies generated by the policy and reach a consensus on how to effectively implement the policy for the benefit of the sector’s investors and the economy at large.

“Having reviewed the lingering controversies between government and auto industry stakeholders on the implementation takeoff date of the new auto policy in Nigeria, the chamber wishes to add their voice by expressing some concerns on the short moratorium period given on the effective takeoff date of the policy.

“If implemented, it will not only constrain them to operate optimally but also negatively affect sustainable transformation of the economy as it would lead to fall in demand of imported used vehicles.

“This will invariably affect negatively the transportation sector; erode the welfare of the citizens by reducing their purchasing power; breed unnecessary monopoly due to privilege/insider information about the government policy; result in increase in unemployment, low income, inflation, amongst others.

According to him, “To ensure that the good intention of government on this policy initiative becomes a reality if well harnessed and implemented and probity brought to bear in the overall interest of all stakeholders, the citizens and the economy, we counsel that there is need for the Federal Government to “put its house in order” before commencing full implementation of the policy.

This is because it is capable of further encouraging diversion of cargoes to neighbouring countries if it is not halted to allow for sufficient moratorium period given to auto industry operators/stakeholders.”

He said, “NACCIMA believes that the implementation of the sharp increase in import duty on fully built vehicles to 70 per cent  (35 per cent  duty plus 35 per cent levy) from 22 per cent (20 per cent duty plus 2 per cent levy) will place the cost of vehicles beyond the reach of about 90 per cent of Nigerians, increase the cost of transportation by at least 50 per cent, increase inflation level and create huge gap between demand and local supply capacity of automobiles  due to infrastructure challenges,” he said.

“Today supply stands at a pathetic 45,000 units while demand stands at 800,000 units per annum, smuggling activities from neighbouring countries will boom, especially from Cotonou Port with imported vehicles still dominate the market place since we have about 1,400 illegal entry routes, over 80 poorly manned borders and an yet to be fully-equipped Customs structure, etc,” he added.

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