Benin Republic controls 63% of Nigeria’s vehicle imports

Neighbouring Cotonou Port in Benin Republic has become import destination for Nigeria bound vehicles, as roll on roll off terminals, which used to handle over 400,000 units of vehicles annually, now do only 37 per cent. BAYO AKOMOLAFE reports

The automotive policy, which was introduced in 2013 to encourage auto assembly plants in Nigeria, has created a lot of revenue for neighbouring Cotonou Port. The policy raised the tariffs on imported vehicles from 20 per cent to 70 per cent, leading to diversion of Nigeria-bound vehicles to the ports in neighbouring countries.

Used vehicles

Before the economic recession, Nigeria was largely a used vehicle market with a ratio of one new car to 134 used cars. A report by PricewaterhouseCoopers (PwC) Nigeria estimated that in 2014, 410,000 cars were imported into the country. It noted that 74 per cent used cars, mainly Toyota and Honda brands, entered the country in the period.

Also, the National Automotive Design and Development Council (NADDC) report estimated annual imports at about 400,000 vehicles. It noted that 100,000 vehicles were new, while 300,000 are used vehicles and valued at about $3.45 billion.

Vehicle diversion

However, in the last three years, Nigeria Customs Service (NCS) has lost N600 billion as revenue due to diversion in the importation of vehicles to neighbouring port. It was learnt that Nigerian ports, which used to handle over 400,000 units of vehicles annually before the advent of the automotive policy, are now handling about 37 per cent annually.

The Port and Terminal Multi-services Limited (PTML) at Tincan Island is worst hit, as NCS’s revenue fell by 32 per cent to N63.18 billion in 2015 as against the N91.45 billon in 2014.

Similarly, Five Stars Logistics Terminal in the same port also experienced short fall. Recently, the Managing Director of PTML, Mr. Asconio Russo, complained that the volume of vehicles being imported into his terminal had dropped sharply to 72,000 units because of the implementation of the automotive policy.

Challenges

Also, he identified the manipulations of tariff rates by relevant agencies of government as the major challenge responsible for diversion. Russo said that while Nigerian importers paid lower rates at Cotonou, they paid higher rates in Nigerian ports.

He said that PTML had suffered from the effect of the country’s automotive policy. Russo explained that while importers paid a fixed amount for vehicles, the percentage benchmark tariff collected at Nigerian ports was a huge source of problem for importers. T his is the major reason for abandoning Nigerian ports, he added.

According to him, the 35 per cent tariff on used vehicles is too high and has become a source of problem.

The managing director explained that the tariff regime charged by NCS entailed that the importer must pay five per cent Value Added Tax (VAT), one per cent inspection levy and seven per cent port surcharge.

He noted that only 10,000 units of vehicles were being discharged monthly in Lagos ports. He added: “Nigeria is losing N200 billion to neighbouring ports annually. The volume of vehicles going to Cotonou is on the increase.

“Out of four vehicles for the Nigerian market, three are discharged in Cotonou.” He noted that Cotonou Port’s roll on roll off service had experienced 50 per cent growth in the last three years

On the statistics of vehicle that were imported through the PTML, the NCS’s Public Relations Officer at PTML command, Mr Steve Okonmah, explained that in 2013, 172, 174 units of vehicles were ferried to the terminal; 129,361 in 2014 while in 2015, only 66,823 units were shipped in.
Implication

Russo said: “Dramatically, we are losing business while Cotonou is gaining business. Everyone can understand what this means. “This policy is affecting the port industry and this is affecting the overall population because the prices of vehicles are going up in the market and this is something we see every day.”

The National President of Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu, who was at the PTML terminal recently, also told Russo that his association had always been critical of the automotive policy because the implementation would affect the businesses of its members.

Customs statistics also revealed that vehicle smuggling through Seme, Ogun, Oyo, Kwara, Sokoto and Katsina states borders with Benin and Niger were rampant since the auto policy was introduced.

Conclusion

It has become imperative for the government to review its automobile policy in order to create jobs for the masses and generate revenue for the country.