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Nigeria Announces Compulsory Vehicle Recycling Fee

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  //automotive-transportation.news-articles.net/co .. -announces-compulsory-vehicle-recycling-fee.html
  Published in Automotive and Transportation on Monday, December 22nd 2025 at 7:27 GMT by legit

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Nigeria’s New Vehicle Recycling Fee: What the Government Is Trying to Do and Why It Matters

In a bold move that could reshape the way Nigeria deals with its aging fleet of cars and trucks, the Federal Government (FG) has announced a compulsory vehicle‑recycling fee that will be levied on all imported motor vehicles. The decision, unveiled by the Ministry of Industry, Trade and Investment in a press release dated July 3, 2024, is intended to curb the surge of illegally dumped vehicles, raise fresh revenue for the state and create a more sustainable waste‑management system. The fee is expected to affect roughly N1.3 trillion worth of used car imports that hit Nigerian shores last year.

What Is the New Fee?

According to the FG’s statement, every vehicle that enters Nigeria through the Customs Service will now be required to pay a recycling fee of 5 % of the vehicle’s value. While the exact percentage may vary for high‑value luxury cars and low‑value pickups, the government has clarified that the fee will be fixed at a minimum of ₦20,000 and capped at ₦200,000. The fee will be collected at the point of entry, meaning importers, dealers and individual buyers will have to pay it before the vehicle can clear customs.

The fee is not a one‑time charge. Once a vehicle has cleared customs, the same fee will need to be paid at each subsequent point of sale, whether it is sold to a dealer, a private individual or a commercial fleet operator. The government has indicated that this “chain‑linked” model is designed to discourage owners from simply discarding their cars or moving them to neighboring states where the fee is less stringent.

Why the Fee Is Being Introduced

1. Environmental Concerns

Nigeria’s environmental watchdog, the National Environmental Standards and Regulations Enforcement Agency (NESREA), has warned that illegal scrapping sites across the country have become breeding grounds for hazardous waste. In Lagos alone, a handful of unregulated “scrap yards” have been identified where engines, batteries and catalytic converters are disassembled without proper precautions, releasing toxic fumes and contaminating soil and waterways.

The new fee will provide a steady flow of resources for the Nigerian Environmental Protection Agency (NEPA) to establish proper vehicle‑recycling plants and to enforce stricter compliance standards. The government’s own spokesperson stated that the revenue will go directly to the National Waste Management and Recycling Fund which will be used to finance the construction of modern, eco‑friendly recycling facilities.

2. Revenue Generation

With Nigeria’s GDP projected to grow at a modest 4 % in 2024, the FG is seeking alternative revenue streams to bridge budget gaps. Imports of used vehicles are a significant portion of the country’s trade deficit – in 2022 alone, the imports were estimated at N1.3 trillion. By placing a compulsory fee on these imports, the government anticipates generating an additional N10–15 billion annually, according to the Ministry’s finance projections.

3. Combatting Illegal Vehicle Importation

The FG also claims that the fee will reduce the flow of unregistered, stolen or counterfeit vehicles that find their way into the market. By adding an extra layer of cost and paperwork, the government hopes to make it more difficult for unscrupulous traders to smuggle in vehicles that do not meet safety or emissions standards.

Links to Related Government Documents and Resources

The article in Legit.ng references several key documents and webpages that provide additional context:

These resources clarify that the fee is not merely a tariff but a policy instrument aimed at fostering responsible end‑of‑life vehicle management.

What This Means for Dealerships and Importers

Dealerships will have to factor the additional cost into their pricing models. For imported used cars, the fee could push the final retail price up by 10–15 %, depending on the vehicle’s value. Many dealers have already expressed concerns that the extra cost might deter buyers, particularly in an economy where fuel costs and exchange rates are already volatile.

Importers, on the other hand, may need to renegotiate contracts with overseas suppliers or shift their sourcing strategy toward more sustainable alternatives. A few importers have hinted that they may start purchasing vehicles from “clean‑label” manufacturers that already include a recycling component in their cost structure, thereby offsetting the fee.

The FG has assured stakeholders that the implementation will be phased. The first year will serve as a “pilot” where customs officials will provide assistance in calculating the fee and in ensuring a smooth payment process. The Ministry plans to release a detailed manual by the end of the year, and an online portal will be set up to allow businesses to submit fee payments electronically.

What’s Next for the Nigerian Automotive Landscape?

The introduction of the vehicle recycling fee could have ripple effects across the automotive sector. On the positive side, it might:

• Boost the development of local recycling industries, creating jobs and reducing dependency on foreign scrap‑material markets.
• Improve road safety by encouraging owners to replace old, dangerous vehicles rather than discard them.
• Promote transparency in vehicle registration, reducing the prevalence of stolen or counterfeit cars.

However, there are also risks:

• The extra cost could inflation the used‑car market, making affordable transportation harder for low‑income consumers.
• If not managed properly, the fee could create a black‑market loophole where unscrupulous traders circumvent the system, undermining the policy’s intent.

The government has stated that it will closely monitor the policy’s impact. An independent audit team will report quarterly on the amount of revenue collected, the number of vehicles recycled, and any environmental improvements observed. The Ministry also announced that it will hold stakeholder workshops to gather feedback and adjust the policy as needed.

Bottom Line

Nigeria’s compulsory vehicle recycling fee marks a turning point in the country’s approach to vehicle end‑of‑life management. By attaching a financial cost to every imported motor vehicle, the FG aims to address environmental degradation, curb illegal scrapping, and generate much-needed revenue. While the policy may present challenges for dealers and importers, it also offers an opportunity to build a cleaner, more sustainable automotive ecosystem.

The true test will come in the next few months as customs officials, industry players and environmental agencies work together to ensure the fee achieves its intended objectives without stifling economic activity. For now, all eyes are on the new fee’s implementation, as the Nigerian automotive industry stands at the crossroads of growth, responsibility and innovation.