As the federal government concludes plans to implement the 35% Custom duties on the importation of fairly-used cars, most Nigerians are expressing worries that the policy may further impoverish the poor masses.
The federal government recently, as part of its new Automotive Development Plan, decided to increase the tariff on the importation of cars so as to encourage the purchase of locally-manufactured vehicles. Stakeholders in the automobile importation industry never prayed for the break of what is termed ‘D Day’, insisting that that the automotive policy has thrown the vehicle importation arm of the automobile industry into chaos, as vehicle prices have risen without any clear direction.
With the new regime, importers of Tokunbo vehicles will have to pay 70% tariff on the total cost of, a development which many Nigerians fear will make prices of Tokunbo vehicles soar beyond their reach, as full implementation of the new auto policy begins today (July 1st) as proposed by government.
However, the Chairman, Conference of Northern States Chamber of Commerce, Industries, Mines and Agriculture, Sanusi Maijama’a, said that federal government needs to put the primary things in place, especially the existing assembling plants, before implementing the policy.
Maijama’a said “there are a lot of issues surrounding the automobile industry in Nigeria, especially lack of effective transport system; therefore, the timing is wrong,” he said.
He said inflation is not the issue but how many Nigerians can afford new cars. “Government should rather regulate properly the influx of fairly used cars in Nigeria”, he stated.
According to him, the action of government was to further create unnecessary hardship for Nigerians, should have a rethink.
At the popular Berger Automobile market in Apapa, Lagos, the 35% duty hike is gradually taking its toll on sale of vehicles.
A cross-section of the dealers who spoke with our correspondents disclosed that dealers of newly-imported used vehicles, especially cars, are not in a hurry to sell. The dealers said that such cars are reserved for the purpose of monitoring sales in order not to sell at a loss.
Johnson Agu, a car dealer, explained that the newly imported used vehicles are placed on standby because no businessman is ready to run at a loss.
According to him, the prices of the new imports cannot be ascertained because of the gradual increase in vehicle tariff.
Agu noted that most of the importers in Festac (Lagos) having new vehicles are not willing to dispose of them in order for them to maximise profit.
However some of the traders that are willing to sell despite the confusion told our correspondent that for such used vehicles, there is N200,000 additional cost, which further indicates that prices of used vehicles are on the rise.
Giving a vivid example on such vehicles, he said a car that is newly imported, which should go for a million naira now sells for N1.3 million.
The new pricing regime however is also giving officials of the Nigeria Customs Service enough time to battle port congestion over Abandoned Vehicles; port stakeholders have raised alarm over the emerging congestion in the port system.
Some of the stakeholders at the popular Car Park ‘C’, at the Tin Can Island Port, confirmed that majority of vehicles imported two months ago since the implementation of the 35% duty collection began, have been abandoned inside the car park.
Speaking, National Electoral Commission (NECOM) Chairman of the National Association of Government Approved Freight Forwarders (NAGAFF) Mr. Okey Nerus said that the congestion
has already affected the traffic of vessels into the country.
According to him, consignments were abandoned at the port because importers were waiting to see if the government would come down on the policy, but that the more they waited the more demurrage the cargo incurred.
Deputy President of NAGAFF, Mr. Ugochukwu Nnadi, said that government is not being sincere with its pronouncement of extension of the date of implementation of the policy.
Government, according to him, might decide to sneak in the 35% levy on the imported vehicles just as it sneaked in the 35% duty collection even before the July 1st date of implementation earlier scheduled.
“Why should we trust them when they failed us on the first promise? We are just waiting and watching, nobody should import, let’s just watch and see”, he said.
“Many people are currently abandoning their vehicles at the port because the 35% duty is too much; there need to be a reversal”, he added.
According to him, freight forwarders had no choice but to pay the duty because failure to pay the money, Customs will auction the cars and keep the money.
Lagos Lawyer and Alternative Dispute Resolution (ADR) consultant; Barrister Valentino Buoro has called on the Federal Government and the feuding freight forwarders to go into mediation for the resolution of the on-going dispute over the new tariff.
Buoro noted that both the federal government and the freight forwarders are currently loosing huge revenue as a result of the avoidable disagreement and consequential disruption of import activities in this area.
He counseled that while it was within government powers to make whatever policies it considers best for the national economy, it was also within the democratic rights of those whom the policies will affect in one way or the other to have a say on the impact of the policy and to demand some alterations or amendment.
Also, automobile traders, under the aegis of Amuwo Odofin Auto Dealers Association (AADA) on its part faulted the introduction of the new auto policy by the federal government, saying the policy is premature while maintaining that the country needs between five to six years to be ripe for the policy.
AADA Public Relations Officer Mr. Kelechi Achilike said that inadequate infrastructure, epileptic power supply and poor road networks are factors that government needs to address before putting the policy in place.
Achilike noted that although government consulted his association during the process of formulating the policy, it failed to consider their perspective, which is that Nigeria is not yet ripe for such a policy.
Continuing, he said, “Without steady power supply, these local car manufacturing companies cannot mass-produce cars that will be affordable for average Nigerians”.
Speaking further, he cited instances of how government banned the importation of Tokunbo tyres just to encourage local manufacturers, but due to poor electricity, the tyre manufacturing companies left Nigeria for Ghana where they have stable power supply.