The import bill for used vehicles, commonly referred to as "tokunbo," into Nigeria has experienced a dramatic decline.
According to the National Bureau of Statistics (NBS), the import bill fell by an astounding 83% year-on-year (YoY) to N138.62 billion in the first half of 2024 (H1’24), down from N819.15 billion in the same period of 2023.
This sharp reduction is primarily attributed to new tax measures introduced by the federal government in 2023.
The new tax regime includes an Import Adjustment Tax (IAT) levy of 2% for vehicles with engine capacities between 2000cc and 3999cc, and 4% for those with engines of 4000cc and above.
These levies are in addition to the existing 35% import duty and 35% levy already imposed on vehicle imports. Notably, vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempt from the IAT levy.
The NBS report further details that in Q1’24, no used vehicles were imported, a stark contrast to the N69.23 billion worth of used vehicles imported in Q1’23.
In Q2’24, the value of imported used vehicles stood at N138.62 billion, marking an 81.5% decline YoY from N749.92 billion in Q2’23. The majority of these vehicles were imported from the United States, with total imports from America amounting to N971.84 billion in Q2’24.
This drop in import bills shows the impact of stringent tax measures aimed at reducing the influx of imported vehicles into Nigeria. As one anonymous commenter noted, "People don't have the financial capacities to import vehicles as the high import duties charged which have increased well over 100% YoY demotivated people from importing. Again, the excessive depreciation of the Naira makes it worse."
The economic implications of this decline are multifaceted, reflecting both the government's efforts to control vehicle imports and the broader economic challenges facing Nigeria.
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