The Federal Government has defended its auto policy that requires vehicle importers, who do not manufacture locally, to pay 70 per cent duty on imported cars.
The Minister of Industry Trade and Investment, Olusegun Aganga, who stated this while addressing journalists after the weekly Federal Executive Council meeting at the Presidential Villa on Wednesday, said the policy is necessary to check the activities of importers putting a “strain on our (Nigeria’s) foreign reserves.”
The minister disclosed that Nigerians spend about $3.4 billion (N544 billion) on importation of used cars and spare parts. He however said the few local vehicle manufacturing plants in the country would get extra concessions of being allowed to import vehicles at 35 per cent duty.
The Minister of Information, Labaran Maku, during the briefing, said Council had earlier asked the trade minister to brief it on the new policy, following ‘misleading’ media reports.
“I briefed council today on a misleading article in one of the newspapers yesterday on the auto policy and we thought it necessary to communicate and correct it,” Mr. Aganga said.
“The article has claimed that the duty on used cars is now 70 per cent from yesterday, that is incorrect. It is 35 per cent.
“It has also claimed that all used cars coming into the country will attract a duty of 70 per cent that again is incorrect.”
The minister justified the advantaged levy given to the manufacturers to import at 35 per cent levy.
“Those in the car assembly programme will be able to import cars to meet the gap, when you look at production and the demand in the country. They will be able to import those cars at 35 per cent, not 70 per cent,” he said.
“It is only for those who are putting a strain on our foreign reserves, who have no intention of creating jobs in the country, who want to continue to remain traders that the 70 per cent duty applies to.
“This is to discourage trading, to encourage local assembly, job creation and unnecessary pressure on our foreign reserves. So, it’s an economic issue and deliberately so,” he added.
Mr. Aganga said Nigerians should be “proud of the progress we have made since that policy was introduced in October.”
“If we don’t implement this policy, the pressure on the economy of this country will be unbearable because we rely heavily on the importation of cars and this is not what we want to use your foreign exchange for.
“Today, we spend more than $3 billion every year on importing cars, and another $3.2 billion and $3.4 billion importing used cars and spare parts.
“With every importation, we are creating new jobs in other countries. Why should we as a country continue with that policy when we have high level of employment in our country just because we enjoy to ride beautiful cars and yet making sure we are creating unemployment in our country. That is not the best way to go as a country of for the economy of this country. That is why the policy was put in place,” he added .
He noted that local manufacturers of cars would import completely knocked down (CKD) and semi-knocked-down (SKD) parts 1 and 2, at 0, 5 and 10 per cent respectively adding that this brings the blended rate of what they produce locally and what they import to a little above 20 per cent.
