‘FG’s 70% duty on imported cars will trigger hardship’

By Emmanuel Ajibulu

Alhaji Jimoh Aremu is a dealer in all kinds of German, Japanese and American vehicles. In this  interview conducted by telephone  from the United States, the auto merchant admonishes the Federal Government to rescind its decision on the new policy that requires vehicle dealers, who do not manufacture locally, to pay 70 per cent duty on imported cars. He maintains that the policy will continue to attract public outcry and, worse still; it will affect the nation economically and keep lots of Nigerians out of job.

Federal Government had, through the Minister of Industry, Trade, and Investment, Olusegun Aganga, said the policy, which came into effect on Tuesday, July 1, 2014,  is necessary to check the activities of importers putting stress on Nigeria’s foreign reserves. The minister further disclosed that Nigerians spend about $3.4 billion (N544 billion) on importation of used cars and spare parts and that the few local vehicle manufacturing plants in the country would get extra concessions of being allowed to import vehicles at 35 per cent duty.

Excerpts:
How are you faring in business since the introduction of FG’s new auto policy?
Honestly car dealers generally in Nigeria not only me are uncomfortable with the new auto policy, because it is taking negative tolls on our business, even the clearing agents and freight forwarders operating at the nation’s ports are apprehensive that they could be out of job with this new policy.
Alhaji Jimoh Aremu

Alhaji Jimoh Aremu

To buttress my point, precisely on Monday, July 7, 2014, the Association of Nigeria Licensed Customs Clearing Agents (ANLCA) and the National Association of Government Approved Freight Forwarders (NAGAFF) come out to protest the new policy urging the Federal Government to suspend it for now.

The two bodies placed an advertorial in the media to condemn the policy, maintaining it can’t work in this present economic situation in Nigeria. I can vividly recollect that the advertorial highlighted the pain the new policy would inflict on clearing agents and freight forwarders.

They reckoned increasing the cost of imported vehicles astronomically before making local alternatives available amount to paying more for the same product. An imported brand new car that sells for N1.5 million will rise to N2.55 million with the policy and used car that cost N700,000 would automatically become N1.19 million with the new policy and therefore unaffordable to many more Nigerians.

The association also raised an issue that the policy will no doubt encourage smuggling while neighbouring countries will benefit more. They also feared there would be mass job loss because if clearing agents and freight forwarders can’t work anymore, they join the army of unemployed Nigerians.

What would you consider as adverse effect of this policy?
My unbiased advice to the Federal Government and I believe they have good listening ears, is to consider the suspension of the new auto policy for now, because of the adverse effects. The tariff hike will have adverse effect in the sense that some people will prefer to use Cotonou port, where we all know they will smuggle it into the country illegally and that will make mockery of this new policy and render it unproductive.

Besides, the new auto manufacturers do not have the capacity to produce enough cars that will be affordable by many Nigerians, especially the low income group. Government should wait to see in reality the efforts of the new auto companies in meeting demands, in terms of their capacity to produce enough cars that will be affordable before embarking on measures to protect them.

Government should also consider that the auto trade remains a big employer of labour, and that the hike in tariff was capable of leading to closure of many businesses and in turn increasing unemployment in the country. Even here in America they manufacture cars locally, yet the government didn’t restrict importation of vehicles into their country and this influx is not affecting their local production and their tarrifs are pocket friendly.

Used vehicles, apart from constituting environmental and public health hazards, are also humanly degrading to Nigerians. What’s your take on that?
There are regulations guiding auto business here in United States, I don’t know of other countries. Before cars could be exported out of here they go through checks and some form of inspection and certification before leaving the ports to their respective destinations. However, I always advice that people should choose their auto dealers carefully.

Besides, other factors must also be factored in; the state of our roads, the kind of fuel available in Nigeria, the availability and affordability of spare parts as well as the technical expertise of our local mechanics who will have to work on the car on the long run are key factors that must be considered whilst going for used cars popularly known as Tokunbo cars or even brand new cars in Nigeria.

However, when manufacturers were designing these vehicles, there was no consideration, for example, on how deplorable some of our roads are. The belief was that all the roads of the countries in the world are the same, fine and motorable. But when the cars get to Nigeria and start going through all the potholes, the flood, water etc; all these factors definitely will impact negatively on these cars.

In Western countries especially in US, there are three grades of fuel, but in Nigeria we do not even know which grade we have. You will recall that there was a time people were afraid to buy fuel into their cars because it could completely damage the engines, the days of ethanol fuel, you remember? I strongly disagree with that erroneous assertion that used cars constitute environmental and public health hazards or humanly degrading, this is absolute falsehood, even in advanced countries people still go for used cars.

- Culled from : http://www.vanguardngr.com