Stakeholders disagree on vehicle importation ban
By From Abdullateef Aliyu, (Lagos) ; Simon Echewofun Sunday & Francis Arinze Iloani, (Abuja)
Mixed feelings have continued to pour from motor vehicle dealers and other stakeholders in the transport sector since the federal government announced the ban of vehicles imported into the country through the land borders.
In a statement, the Nigerian Customs Service (NCS) said importers had up to the end of December to clear their vehicles in neighbouring ports, saying the ban would take effect from January 1, 2016.
Shortly after the announcement, some port operators welcomed the ban, saying it would boost commercial activities, which were almost brought to a halt as a result of crisis in foreign exchange.
The operations manager, Ports and Terminal Multi Services Limited (PTML), Mr. Jack Angrish, told the News Agency of Nigeria (NAN) that the policy would have a lot of positive reaction in the auto sector.
“The spirit behind the ban is to bolster domestic manufacturing and vehicle assembly that have been at their ebb over the years. With proper monitoring and enforcement of the measure, the country will garner more revenue from vehicle imports through the ports.
“The influx of vehicles through the land borders has taken the shine off the vehicle seats in the ports,” Angrish said.
According to him, vehicle imports have reduced from 30,000 to 6,000 in the last eight months, with the attendant problem of loss of jobs by terminal officials. “With the ban, importers will now route their vehicles through the ports, which is good revenue for the government.
“The policy will put a stop to smuggling of cars into Nigeria, and the revenue that hitherto accrued to ports of Cotonou and Lome will be back in Nigeria,” he added.
Equally, the chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Mrs. Vicky Haastrup, backed the action. She argued that if the move was well implemented by Customs, it would reduce smuggling of vehicles into the country and revive the operations of Roll-On-Roll-Off (RORO) terminals in the country.
The RORO terminals are specialised port terminals that handle all types of vehicles entering Nigeria at the seaports.
She urged the federal government to scrap the high import duty regime imposed on vehicles by the administration of former President Goodluck Jonathan in 2013, saying it has been affecting the clearing of vehicles at the ports.
“In addition to this ban through the land borders, we appeal to the president to return the import duties on vehicles to 20 per cent from the prohibitive 70 per cent tariff imposed by the former administration,” she said.
The terminal operator disclosed that since 2014 when the 70 per cent hike in the tariff of imported vehicles was made, 80 per cent of vehicle cargo traffic was lost to the ports of neighbouring countries, just as 5,000 direct and indirect jobs at the affected ports were lost.
On his part, an auto dealer at Agidingbi, Ikeja, Lagos, Mr. Femi Olawale, said the policy was a welcome development, saying it must be intended to control the quality of vehicles being imported.
He said the duty payable on import through land borders and the sea was more or less the same. He said the implication of the policy was that vehicle buyers should be more careful in carrying out any purchase.
“From January you have to check documents properly before paying because people could forge documents and give them to you as genuine,” Olawale said.
Another dealer, Mr. Frank Okenwa of U-CEE Autos Limited, noted that government’s decision would discourage smuggling because security would be invigorated.
“It is a good development. I don’t do Cotonou business or Idi Araba. It supports border crimes. You can steal a car and say you have cleared it. You can prepare documents and so on,” he noted.
Okenwa also wants the reduction of duties payable on new and used vehicles as the scarcity of dollars and high import duty had pushed up their prices.
Decision is sudden, could raise smuggling activities – Dealers
While some stakeholders saw the ban in a positive light, others felt the decision was sudden and could trigger a rise in the smuggling of vehicles.
The chairman of the Association of Motor Dealers in Nigeria (AMDN), Lagos chapter, Metchie Nnadiekwe, feared that it would encourage smuggling and increase crime rate, noting that the ban is too sudden.
“Smuggling will increase because the vehicles must come into Nigeria. I think government should prepare on how to combat smuggling because it will increase.
“The ban is too sudden; and before we begin to ban, we must make provision for certain things. I believe this ban will only encourage and increase smuggling, whether they like it or not. This is because we don’t manufacture any vehicle here in Nigeria,” he said.
Mr. Okezie Onu, a car dealer in Nyanya, Abuja, believes the high duty rate at the ports would hike the prices of vehicles because Nigerians have been having respite due to the land border imports.
He said: “It is a huge challenge to dealers because the Forex is crippling businesses for us, and now, this ban will worsen it.”
If the high duty at the ports is not reversed, Mr. Onu feared many dealers who have employees under them may soon run out of business for not being able to meet up with the conditions at the seaports.
Meanwhile, a local at Kishi, a border town in Irepo Local Government Area of Oyo State, Mr. Agbaje Mike, said the decision would cut jobs among drivers and spare parts dealers. He said that many mechanics and drivers engaged in moving imported cars from Cotonou to their destinations in the North and other parts of Nigeria.
“Many spare part dealers convey their wares in the vehicles to their market places after they had cleared them at the borders. With this ban, Nigerians should brace up for a rise in the cost of spare parts too,” he noted.
Ban consistent with auto policy – Automotive Council
The decision to ban vehicles by land borders received a boost when the director–general of the National Automotive Design and Development Council (NADDC), Engr. Aminu Jalal, exclusively told the Daily Trust on Sunday on phone that the council was in “full support” of it.
He said importation of vehicles by road had, over the years, deprived Nigeria of revenues that should have accrued to it through vehicle import duty.
“The problem with vehicles that come through the land borders is that majority do not pay the Customs duty. They pass through illegal channels. So government is losing revenue; that is why, when this proposal came in, government approved it,” Jalal said.
Before the current recession, the Council put annual imports at 400,000 vehicles valued at about US$3.45 billion, out of which 75 per cent are used cars. However, due to recession, the Council recently disclosed that the country’s automobile market size has dipped from 400,000 to between 250,000 and 300,000 vehicles yearly.
Jalal said the decline in the market size could be attributed to scarcity in foreign exchange (Forex) to import vehicles, and the declining purchasing power of Nigerians due to recessionary shocks in the economy.
There are concerns that the ban on importation of vehicles through the land borders by next month will further affect the purchasing power of Nigerians and shrink the market size further.
On the impact of the ban on supply and the preparedness of local assembling plants to meet increased demand, Engr. Jalal said three quarter of the vehicles imported into the country came through the ports, leaving only one quarter to the land borders.
He further said that local assembling plants had the capacity to meet demands as the market size had been a hindrance to their full capacity operation.
“If you go to Peugeot they will tell you that they could do 25,000 to 30,000 vehicles a year. But, they are doing 3,000 because there is no market,” he said.
He said stakeholders under the Joint Task Force had agreed to work together to ensure payment of duty before vehicle registration to ensure that government is not shortchanged in terms of revenues.