Nigeria is gearing up for a major shift in its automotive sector with the introduction of a compulsory vehicle recycling levy, set to take effect from the year 2026. This new policy forms a core part of the Federal Government's approved End-of-Life Vehicle (ELV) programme, a national framework designed to overhaul how vehicles are disposed of once they reach the end of their safe and useful life.
What is the New Vehicle Recycling Levy?
Starting in 2026, any Nigerian purchasing or registering a vehicle will be required to pay a mandatory recycling fee. This charge will be applied at the point of registration and will cover both newly imported vehicles and those assembled locally. The initiative is a direct response to the growing issues of environmental pollution and the country becoming a dumping ground for unsafe, worn-out imported cars.
Officials state that the programme is designed to stimulate a formal, structured vehicle recycling industry. Currently, the process of dismantling old cars is largely informal. The ELV policy aims to bring this activity into a regulated system, setting standards for vehicle lifespan management, safe dismantling, material recovery, and final disposal.
Economic Impact and Key Objectives
The government projects significant economic benefits from this reform. By formalising the scrap and spare parts market, the programme is expected to generate over N150 billion in annual revenue. This revenue will be used to fund certified recycling facilities that ensure safe and eco-friendly disposal processes, preventing hazardous waste from contaminating the environment.
Furthermore, the policy is poised to create thousands of new jobs across a wide value chain. Employment opportunities are anticipated in areas such as vehicle collection and logistics, professional dismantling, refurbishment of usable parts, and the resale of recovered components. This move will also formalise the popular but largely unregulated "Belgian parts" trade, bringing it under official monitoring.
Stricter Rules for Used Vehicle Imports
A critical component of the broader reforms involves tightening regulations around used vehicle imports. Beginning in 2026, all used cars destined for Nigeria must undergo a compulsory pre-export inspection and certification in the exporting country. This certification must confirm that the vehicles meet minimum safety and usability standards before they are shipped.
Importantly, the cost of this pre-export certification will be the responsibility of the foreign exporters, not the Nigerian buyers. This measure is intended to improve the quality of imported used vehicles and align Nigeria's practices with international standards seen in Europe and parts of Asia, where upfront recycling fees are common.
The policy arrives at a time when Nigeria's used vehicle market is experiencing a strong recovery. Recent data from the National Bureau of Statistics (NBS) shows that car imports were valued at approximately N1 trillion in the first nine months of the year, marking a significant increase from the previous period.
Future-Proofing with EV and CNG Focus
Alongside the recycling framework, the government is promoting a shift towards cleaner automotive technologies. The policy supports the conversion of existing petrol and diesel vehicles to electric (EV) and compressed natural gas (CNG) alternatives. In preparation for this transition, the National Automotive Design and Development Council (NADDC) has already begun training regulators and technicians in EV maintenance and CNG retrofitting.
National occupational standards and official certification programmes for EV and CNG-related work are scheduled to be launched by 2026. Industry studies highlight the potential of the recycling system, noting that more than 85% of materials from end-of-life vehicles—including metals, plastics, engines, and electronics—can be successfully reused or recycled, laying the foundation for a circular economy in the automotive sector.
