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Thursday, March 28, 2024

The New Tariff Regime on Imported Cars

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Ngozi Okonjo-Iweala
Ngozi Okonjo-Iweala


The new increase in tariff on imported vehicles has entrenched disquiet among stakeholders in the automotive industry.

Though it has been of great concern why the government is bent on implementing the policy, it is worrisome that there have not been adequate arrangement for local manufacture of automobiles to cushion the effect of the policy on Nigerians.

Enunciated in order  to encourage local content in the production of vehicles, the Minister of Finance, Ngozi Okonjo-Iweala and the Comptroller General of Customs, Abubakar Dikko, had directed that the implementation of the new tariff should kick off 1 July, 2014 in line with the automotive policy earlier introduced by the Federal Government. 

 While the Nigerian Customs Service has been accused of implementing the new rate earlier than the scheduled date, the burden would now  be borne by the masses who will now pay more to own a car.

As against the initial 10 percent tariff, importers and vehicle dealers are to now pay 35 percent, 5 percent VAT and 7 percent for National Automotive Development and other charges. Though government’s intention to encourage local production and to provide made-in- Nigeria automobiles is needful, it has been of great concern to Nigerians how soon this dream would come true as there are just a few investors and car manufacturing companies in the country compared to the teeming population of car users in the country.

While the few automobile assembly plants in the country are moribund,prostrate and gasping for air, the assurance that even made-in-Nigeria automobiles will be cheaper is difficult to accept due to the high cost of business operations in the country.

 Volkswagen Nigeria Limited and Peugeot Automobile survived and did well in the 70s and 80s without any hike in tariff. How did they manage the situation and what has changed?

 More importantly, the reasons some of these companies and other multinational companies shut down operations in Nigeria or moved out of the country should be of great concern to the Federal Government.

We believe that the major reasons which are very poor electricity supply, unfavorable business environment and policy somersault on the part of the government must be tackled if the dream of having made-in-Nigeria vehicles would be a reality, though Nigerians will have to live with the consequence of the hike in tariffs and levies in the short run.

 Nigerian government is notorious for rushing into or starting policies without the political will to seeing them through. For the automotive policy to stand the test of time, the Federal Government must sustain its automotive policy irrespective of a change in government.

As much as the automotive policy would encourage investment, massive creation of job opportunities, government must provide regular electricity supply.

This will prevent what happened in the past where cost of fuelling electricity generating plants by manufacturers and owners of many business concerns forced them out of the country.

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