High Tariff Slashes Used Vehicle Importation By 51%

Nigeria has recorded 51.2 per cent drop in the importation of vehicles in the first six months of the year due to high tariff and implementation of the Vehicles Identification Number (VIN) valuation policy of the Nigeria Customs Service. Data by the National Bureau of Statistics (NBS) revealed that the number of used cars imported into the country in the first half of 2022 was N169billion, compared to N346.2billion in the same period of 2021, leading to a drop of N177.2 billion in revenue.

The statistics revealed that vehicles worth N72.3billion and N96.7billionn were imported in the first and second quarters of 2022 respectively. However, in the same period in 2021, used vehicles shipped into the country were valued at N174.2 billion in Q1 and N172 billion in Q2. Also, in the second half of 2021, N185.4 billion and N85.7 billion were spent on used vehicles in Q3 and Q4 respectively, which amounted to N271.1 billion. It was gathered that importers were reluctant to ship vehicles through the seaports because of huge charges by Customs since the enforcement of VIN.

The policy, which seeks to harmonise the tariff system on all imported second-hand vehicles into the country, was first introduced in January 2022 and re-launched in May 2022 for the purpose of allocating standard values to all vehicles coming into the country. According to NCS, the system automatically determines the value of import duty payable on a vehicle immediately the vehicle goes through a dedicated scanning machine. But due to the outcry and agitation of freight forwarders over some perceived imperfections, the policy was suspended, reviewed and relaunched in May 2022.

However, the implementation of the policy has led to astronomical increases in the tariff of tokunbo vehicles as high as 200 per cent. According to the Managing Director of Sceptre Consult, Mr Jayeola Ogamode, the policy had led to a drop in the importation of second-hand vehicles with the attendant drop in revenue to the Federal Government. He said that government should abide by the auto policy and ensure that used vehicles from 2010 were allowed to pay normal duties, rather than the 2013 duties which were imposed on all imported vehicles. According to him, the National Automotive Industry Development Plan Bill, was introduced in 2014 to encourage local manufacture of vehicles, while phasing out the importation of used vehicles, stressing that the policy classifies private vehicles above 15 years as overage vehicles.

Ogamode: “What Customs have done is in contravention of the law. There is a law, Act 20 0f 2003, passed through the Nigerian Shippers Council. That is the law that is based on value. The Customs do not have any other right to put value.” Also, the Acting National President of the Association of Nigerian Licensed Customs Agents, Mr. Kayode Farinto, explained that VIN was supposed to recognise vehicles from 2010 instead of those from 2013 upwards. He added that the policy had made a lot of people consider bringing in vehicles through unapproved routes. Farinto noted: “The issue of the year is a very big one and that is what is discouraging the importation of used vehicles, with people bringing in these vehicles through unapproved routes like Cotonou. What happens is that they started their valuation from 2013. “I remember sending a letter to the Comptroller General of Customs about this particular issue. I told him it was wrong that the policy was for 12 years. “They are supposed to start from 2010 or 2011 and up till now, they have not reversed it, which is very bad. If the Comptroller General of the Customs works with the Federal Government on that and brings down the VIN valuation to 2011 or thereabout will be fine. The loss is big because since they started the VIN valuation, they have not reversed it.”