Motor Vehicle Imports, Others Record Extensive Decline
As naira continues to depreciate, Nigeria’s motor vehicle imports recorded a massive 32 per cent decline in 2023 with total imports through the Nigerian ports at 132,293 units, from 194,550 recorded in 2022.
Findings from the Nigerian Ports Authority (NPA) cargo throughput information also indicated that most other categories of imports recorded significant declines during the period.
Other areas of import trade that experienced significant drops last year include ship traffic, cargo traffic, and container traffic as well as berth occupancy.
The Naira had recorded unprecedented depreciation in 2023 with the official exchange rate closing at average N820/ USD1 as against N460/USD1 the previous year while the parallel market rate closed at N1,090/USD1 down from N720/USD1 in 2022.
Stakeholders in the import trade sector said that with a worsening exchange rate situation so far in 2024 at over N1,400/USD1, the trade situation is expected to deteriorate further in 2024.
Vehicle dealers noted that the cost of procurement of the vehicles in Europe and America has remained stable and even gone down in some cases last year.
But, according to them, the cost escalation has been recorded in-country at four points, namely, the Naira equivalent of the purchase price, the customs duty and the clearing cost as well as port charges.
The Nigerian Customs Service (NCS) has frequently jerked up duty rates following persistent rise in exchange rate. The last raise was effected in the fourth quarter of 2023 putting the duty rate at N950/USD1, up from N460/USD1 at the beginning of the year. This is over 110 per cent increase.
Similarly clearing costs and port charges have increased by average 80 per cent during the period.
Consequently, vehicle prices have gone up by a minimum of 45 per cent and in some cases, by 75 per cent.
Dealers said this development worsened the business as patronage dwindled massively, leading to poor sales. The situation, according to them, was compounded by the increasing economic hardship in the country which forced most citizens to reorder their priorities away from ownership of personal vehicles.
On the decline of vehicle import, National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Mr. Emenike Nwokeji, said that continuous downward slide of the value of Naira and high import duty rates on vehicles were responsible for the decline.
He said: “The reason for drop in vehicle importation is very obvious; the scarcity and high cost of forex is the lead issue responsible for the drop in vehicle importation.
“As at today, it is over one thousand and four hundred Naira to one dollar. This is the major reason and it is for the same reason that the cost of vehicles have also gone up in Nigeria; because if you buy a car for $1,000 and without paying for any other thing the value here translate to N1.4million automatically. So a small vehicle that people use for Uber that cost about N3million before, now goes for as much as N5million.
“The high duty rate is another issue at stake because the higher the value, the higher the duty rate.”
Speaking to the issues, Chief Executive Officer of the Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, also bemoaned the decline in imports, adding that until the government does something drastic, the situation could get worse.
Yusuf said: “The reasons are very straight forward. The number one is the foreign exchange rate; what was the foreign exchange rate last year and what was it in 2022 and what the exchange rate is today.
“You are talking of an increase of over 80 per cent or more on the exchange rate, now you now have the import duty, they use the prevailing exchange rate to convert and calculate duty.
“There are other costs like VAT, shipping company charges, terminal charges and all that will be calculated based on the same exchange rate. So everything is based on that rate, so the cost has become prohibitive.”
