Nigerians Spent N148 Billion In 3 months To Import Used cars

Posted: Aug 12, 2019 in News
Tags: ,

According to National Bureau of Statistics (NBS) of Nigeria, Nigerians spent a whopping sum of N148 billion to import used Vehicles (popularly known as Tokunbo or “Belgium) in the first quarter of 2019.

According to the NBS report, out of the total N3.58 trillion worth of goods imported in the first quarter of the year, used Vehicles amounted to N148 billion. This represents about 4.63% of Nigeria’s total import in three months.

Nigeria’s top 15 imports constitute about 38% of total imported goods in the first quarter of 2019. The top 15 imported goods were estimated to be valued at N1.35 trillion.

Top on the list is laboratory, hygienic or pharmaceutical glassware products, which was estimated at N517 billion for the quarter. Similarly, the second item on the top 15 list of imported goods is the Premium Motor Spirit (Petrol), gulping the sum of N190 billion. Meanwhile, used vehicles are the third most imported goods into Nigeria.

See breakdown of imports:
1st – Laboratory glassware – N517 billion
2nd – Motor spirit, ordinary – N190.7 billion
3rd – Used Vehicles – N117.4 billion
4th – Imported motorcycles – N95.3 billion
5th – Gas Oil – N62.2 billion
6th – Machines – N56.7 billion
7th – Durum wheat (Not in seeds) – N43.8 billion
8th – Durum wheat, Seed – N43.8 billion
9th – Sugar Cane – N34.5 billion
10th – Lubricating oils to be mixed – N41.6 billion
11th – Used Vehicles – N31.4 billion
12th – Vehicles (petrol fuel engine) – N30.8 billion
13th – Other machine-tools – N29.3 billion
14th – Other Herbicides – N24.8 billion
15th – preparations for infant use – N23.3 billion

An earlier analysis of data obtained from the U.S Department of Commerce shows that Nigeria imported used vehicles worth $526 million (N161 billion) from the U.S in 2018, as against $284 million (N87 billion) in 2017. This implies that a large chunk of Nigeria’s foreign exchange is spent on imported vehicles.

Since 2015, the total amount of money spent on the importation of vehicles from the U.S only rose significantly. Further analysis of the NBS data shows that between March (2018 and 2019), Nigeria spent the sum of N417.66 billion to import Cars in Nigeria in one year, estimated at N417 billion

Nigeria, a dumping ground?
Importation appears to be one of the major banes of the Nigerian economy. This explains why car importation has surged over the years. The figure provided by the bureau, omitted smuggled cars through our porous borders.

Smuggled items and the importation of sub-standard goods have led to the death of several companies.

Recently, the CBN announced that it has concluded plans to close the bank accounts of smugglers. While this is a step in the right direction, it may not curb the importation of used cars.

Nigeria’s automobile policy:

One would wonder why Nigeria’s automobile industry has been at a standstill for many years. While Federal Government in 2014, increased import tariffs and duties on imported new and used vehicles to as high as 70 percent, while reducing tariffs on semi-knocked down (SKD) and complete knocked down vehicles and assembly machinery to a range of 0 to 10 percent.

Five years on, car importation still gulps billions of Naira. According to the Managing Director of VON Automobile Nigeria Limited and Chairman of the Nigeria Automobile Manufacturers Association, Tokunbo Aromolaran, said,

“Nigeria had about five or six booming auto industries in the 70s; they all died because they couldn’t compete against the imports from China and Southeast Asia. The industry was redefined by the Auto Policy as most of you know. We have achieved partial success as envisaged when that policy was put together. Partial, in the sense that not all the requirements of the policy have been or is being implemented as it should.

“Today, South Africa has a full auto industry. They can produce everything from ink to the final car, including engine blocks. BMW is there, Mercedes is there, Toyota is there, Volkswagen is there. South African blacks like you and I are on the floors of the factories, producing those vehicles. Nothing says that Nigerians could not do the same.”

Four ways this affects Nigerian economy are:

Increased importation of used vehicles would affect innovation and production of vehicles in the country. As a result, the Federal Government’s auto-policy needs to address this.

According to sources, the Nigerian Customs revenue is dwindling due to fewer vehicles coming through the ports, hence, FG loses billions of Naira.

Demand for foreign exchange to pay for the imported vehicles may also cause undue pressure on Nigeria’s fragile exchange rate system.

Finally, rising importation of used cars is a quick way to discourage investors in the automobile industry, and further dampens hope of revitalising the sector.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s