High Exchange Rates and Import Duties Cause 60% Drop in Vehicle Imports

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High exchange rates and Customs import duties on cargo clearance have caused a significant drop in vehicle importation into Nigeria, decreasing by 60 percent, as reported by The ECONOMIC TIMES.

According to data gathered by The ECONOMIC TIMES, vehicle imports dropped from 45,000 units between January and June 2023 to just 18,000 units during the same period in 2024. This decline is attributed to various factors, including high import duties, taxes on used vehicles, and the imposition of an import levy on used vehicles.

The current exchange rate for the clearance of imported cargoes at seaports stands at N1,512.21 per dollar, while the official exchange rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM) is N1,509.67.

Tunde Keshinro, General Manager of Port and Terminal Multiservice Limited (PTML), confirmed the drop in vehicle importation, attributing it to the restriction of rebates on ex-factory prices used for assessing import duty to 10 years instead of the 12 years allowed by law. This restriction forces vehicles older than 10 years to pay higher import duties.

“For the period between January and June 2023, PTML terminal handled about 45,000 vehicle units, while in the same period in 2024, there was a significant reduction to less than 18,000 units,” Keshinro said. PTML, a major roll-on-roll-off (RoRo) terminal in Nigeria, handles 65 to 70 percent of the vehicles imported into the country.

He further noted that high exchange rates for importation and cargo clearance have made imported used vehicles unaffordable for many Nigerians, who rely on private vehicles for personal and commercial transportation.

Dr. Kayode Farinto, Managing Director of Wealthy Honey Investment, a clearing and forwarding company, corroborated the drop in vehicle importation, noting a 55 percent decline. He also reported a 30 percent drop in container imports and a 20 percent decline in bulk cargo.

“In the last few months, there has been a significant drop in the volume of cargo in the country due to the instability of the exchange rate,” Farinto said. “The situation has not been very rosy for us in the industry, particularly the freight forwarders. We are not faring well. Many have left the job, some remain hopeful for better days, and sadly, we have lost some members.”

Farinto predicted that the volume of imports would continue to decline unless the exchange rate stabilized. He called for a predictive exchange rate specifically for Customs purposes and suggested a tripartite meeting between the Central Bank of Nigeria (CBN), Customs, and the Ministry of Finance to address the issue.

“We need a stable exchange rate to avoid economic chaos,” Farinto emphasized. “Customs must negotiate with the CBN and involve stakeholders like freight forwarders in the discussions. Without action, our economy will suffer further.”

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