Due to the instability and volatility of foreign exchange in the country, several foreign-used vehicles imported into the country have been abandoned at vehicle terminals in Tin-Can Island Ports Complex, Apapa.
Aside from abandonment, vehicle Importation has gone down drastically due to the same forex instability and volatility.
It was gathered that the abandonment was as a result of the increase in exchange rate for Customs clearance by the Central Bank of Nigeria (CBN).
A National newspaper LEADERSHIP reports that since the start of the administration of President Bola Tinubu, the CBN has increased the exchange rate for cargo clearance seven times:
on June 24, 2023, CBN adjusted the exchange rate from N422.30/$ to N589/$; on July 6, 2023, it was adjusted to N770.88/$; on November 14, 2023, it was adjusted to N783.174/$; in December it was adjusted to N951.941/$; on February 2, it was moved to N1, 356.883/$; on February 3, it was raised to N1, 413.62/$ and on Friday, February 9, 2024, it was raised to N1,417.635/$.
Clearing agents told our correspondent that, at present, it cost N20 million to clear a 2022 Lexus RX 350 model from the seaport and N3.4 million for a 2006 Toyota Corolla.
According to the public relations officer, PTML command of the Association of Nigerian Licenced Customs Agents (ANLCA), Ayo Sulaiman, from June 2023 till now, vehicle clearance cost has gone up by over 120 percent, thereby affecting importers’ forecast.
Sulaiman, however, said vehicle importation into the country has gone down drastically while importers are currently abandoning them over clearance costs.
“We can all testify that from December 2023, vehicle Importation dropped by 50 percent, and currently it has dropped to 30 percent and that’s why the Customs Service is trying to give incentives on values and duty on imported vehicles. So, for the service to go the extra mile, it showed that there is a problem.
“Also, if you enter some terminals, it’s like a football field; go to Grimaldi, a five-star terminal, it’s something everyone can see, it’s not hidden: importation through the seaports has gone down drastically. The incentive is work in progress; they want to encourage vehicle importers because if people don’t come up to pick their vehicles, the owners and Customs will lose even when it’s eventually auctioned; it’s not in the best interest of the importers, so Customs wants to give importers the right of first refusal by giving incentives. That’s to show you things are not well with importation of vehicles at the port,” he stated.
Explaining why importers are abandoning their vehicles at the seaports, Sulaiman, said that exchange rate volatility had ruined their forecast.
“Importers are currently abandoning their vehicles because when an importer imports one or two vehicles in December with the hope of clearing at N951/$, only for the vessel to berth and the exchange rate for clearance has been adjusted to N1,417/ $1, how will such person get the fund to cover the huge disparity?
“And, if such a huge disparity is factored into the vehicle, how much will they sell such a vehicle after clearance?” he asked.
“Some people discovered that the duty and terminal charges are more than the value of the vehicles, then they will abandon it in the port,” he pointed out.
Sulaiman further disclosed that because Nigerians cannot afford imported used vehicles, they now go for Nigerian-used vehicles.
“Currently in Nigeria, the auto industry is not for the middle-class again and Nigerians now go into third-party purchases. These are people getting Corolla, Camry of whatever year before, now they are finding it difficult to buy, but buying Nigerian-used because that’s what their capacity can do; it’s about purchasing power.”
According to him, from December 2023, there has been over 30 percent increment in Customs exchange rate for cargo clearance and clearing agents get calculation for duty payment through the ex-factory price and the dollar exchange rate.
“Now, from N951.941 in December to N1,417 today, we can all see the fluctuation and this is affecting the market. In June 2023, with N1.2 million, a 2012 Toyota Corolla can be cleared from the port, but now it’s being cleared with N3.4 million, all isn’t well with Importation of vehicles,” he stated.
The general secretary, Tin Can Island Chapter of the Association of Nigerian Licenced Customs Agents (ANLCA), Barr. Mike Ovien, corroborated that vehicle importation had dropped due to foreign exchange volatility.
“Before the president (Bola Ahmed Tinubu) took over (in May 2023), importation had dropped and that was due to the standard of operations introduced and the foreign exchange volatility; and now the exchange rate has gone far higher, to N1417/$1.
“Importation has dropped because the duty is high for importers to pay. If you are paying over N20 million to clear a 2022 model of RX 350, then it’s not an easy venture and when you are bringing in 10 vehicles before, you will reduce it to two. Importation has reduced drastically due to the CBN exchange rate,” he said.
Corroborating Sulaiman, Barr. Ovien said importers are abandoning vehicles because of the exchange rate differential.
“Why won’t importers abandon their vehicles in the port? You budgeted a certain amount to clear your vehicle from the port only to be told that the exchange rate has increased, and it’s not a small amount as it runs into several millions of naira; so tell me which bank will invest in an importer bringing in a vehicle with this unstable exchange rate?
“If I can’t get the imported used car, I should be able to make do with a locally used one. They are also okay if their parts are available in the market because bringing in Tokunbo is on the high side,” Ovien stated.
Source: Leadership Newspapers