In a significant policy shift aimed at cleaning up Nigeria's streets and modernising its automotive sector, the Federal Government has announced the introduction of a compulsory vehicle recycling fee set to commence in 2026. This move comes at a time when the country's expenditure on imported vehicles has soared past the one trillion naira mark.
Formalising a Multi-Billion Naira Informal Market
The National Automotive Design and Development Council (NADDC) revealed the details of the new End-of-Life Vehicle programme, which has already received approval for implementation. According to the council's Director-General, Joseph Osanipin, the initiative is designed to ensure that vehicles which have reached the end of their operational life are disposed of responsibly.
Osanipin explained that the current practice often leads to cars being abandoned on roadsides or dismantled in unsafe, informal settings. The new policy will mirror systems in developed nations, where owners pay a fee towards future disposal costs at the point of vehicle registration. "In developed countries, when you buy a new vehicle, you make a payment during registration towards the disposal of that vehicle when it reaches the end of its life," he stated, emphasising the need for Nigeria to adopt similar environmental and safety standards.
The NADDC projects that this formalised system could generate annual revenues exceeding ₦150 billion. Beyond the financial benefit, the council highlights the existing value in Nigeria's thriving informal market for second-hand parts, often called the 'Belgian parts' market. Studies indicate that over 85% of components from end-of-life vehicles are reusable or recyclable, pointing to a potential circular economy worth billions of naira and capable of creating thousands of jobs in dismantling, refurbishing, and logistics.
Policy Unveiled Amidst Surging Vehicle Imports
The announcement of the recycling levy coincides with a major rebound in Nigeria's vehicle import market. Recent data shows that the value of imported passenger cars reached approximately ₦1.01 trillion in the first nine months of 2025, a notable increase from about ₦894 billion in the same period of 2024.
Figures from the National Bureau of Statistics (NBS) confirm that this recovery accelerated in the latter half of the year, with a sharp jump in the third quarter. Analysts link this surge to improved foreign exchange stability and renewed confidence among importers, underscoring the continued dominance of fairly used vehicles, known locally as 'Tokunbo', in the Nigerian market.
Broader Reforms: Certification, EVs, and Local Manufacturing
As part of a comprehensive overhaul, the NADDC will also introduce mandatory pre-export certification for all used vehicles imported into Nigeria from 2026. This measure is intended to prevent the country from becoming a dumping ground for rusted and unroadworthy vehicles, with the certification cost to be borne by foreign exporters, not Nigerian buyers.
Simultaneously, the council is pushing forward with plans to accelerate the conversion of petrol and diesel vehicles to electric and compressed natural gas (CNG) power. Training programmes on Electric Vehicle (EV) technology are already in progress, with formal certification slated to begin in 2026.
Director-General Osanipin stressed that component manufacturing represents the largest value opportunity in the automotive sector. He noted that Nigeria's annual spending on tyres, brake pads, filters, and batteries surpasses its expenditure on importing complete vehicles. To cement these reforms, plans are underway to present an Auto Industry Bill to the National Assembly, positioning 2026 as a pivotal year for the transformation of Nigeria's automotive industry.
