NIGERIA’S dependence on car imports looks set to get worse over the near future after President Muhammadu Buhari granted a 30% import duty reduction on passenger transport vehicles cutting the rate to 5% from 35% with immediate effect.
With 12m vehicles on her roads, Nigeria is a major market for several automobile brands and despite this fact, she has very few local assembly plants. Innoson Motors in Nnewi in Anambra State, is Nigeria’s only indigenous automobile manufacturer but it has not managed to secure a monopoly when it comes to government purchase of vehicles.
With the amount of cars assembled locally unable to match demand the government has opted to ease the duty on imports rather than step up local production. Under the new directive conveyed through a circular from the headquarters of the Nigeria Customs Service (NCS), the import duty on aviation engines and spare parts will also be reduced by 30%.
According to the circular, the reduction followed the decision to prune applicable levies and duties on vehicles to mitigate rising transport costs and boost the mass transit industry. It added that the measure was taken to support the implementation of the 2021 budget of economic recovery, which culminated in the changes of the fiscal framework in terms of the importation of automotive vehicles into the country.
It reads in part: “Pursuant to the assent by Mr President to the Finance Act 2020 to support the implementation of the 2021 Budget of Economic Recovery and Resilience, certain changes to the fiscal framework regarding the importation of specific automotive vehicles into Nigeria have been introduced. These reforms are designed to reduce the applicable levies and duties on vehicles, mitigate rising transport costs and boost the road transportation and mass transit industry.”
Other measure included in the directive include a reduction of the import duty on fully built agricultural tractors to 5% from 35%, a reduction in the import duty on fully built units of motor vehicles for the transport of goods. It also includes fiscal incentives for the aviation sector, offering duty reductions for airlines registered in Nigeria who will now enjoy free importation of aircraft, engines, spare parts and other components.