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VP Osinbajo

Nigeria slashes duties on imported vehicles to help fights high cost of transportation ~VP

By on November 23, 2020 0 191 Views

By Oludare Mayowa

Nigeria said the proposal to slash duties on the imported automobiles to 10 percent from 35 percent was meant to tackle the high cost of transportation in the wake of the hike in fuel pump price, Vice President Yemi Osinbajo has said.

Osinbajo, who spoke at the ongoing Nigerian Economic Summit in Abuja said local production of vehicles in the country represents 1.94 percent of annual demand, leading to high transport costs in the country.

The Vice President said the government is reducing duties on motor vehicles for transportation to cut commuting costs and help Nigerians beat high inflation.

Responding to the issue of import duties raised by some speakers at the summit, the Vice President noted that “the point of the reduction in levies on motor vehicles, commercial vehicles for transportation is to reduce the cost of transportation by reducing the cost of vehicles.”

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He explained that “with subsidy removal and the increase in fuel price and the pass-through to food prices, transportation costs had to be reduced. Now the automotive policy is directed at localizing the production of vehicles.

“So the logic was increase the duty and levies so that local production becomes more competitive. But the annual demand for vehicles is about 720,000 vehicles per year. Actual local production is 14,000 vehicles a year.

“So, the problem is that at current rate of production, we will not meet the serious national needs and this will just mean higher prices of vehicles and greater strain on other sectors of the economy that depend on transportation. But we are not giving up on the local auto industry.

“Two important things to note; the first is that we still have relatively high duty at 35%, so there is still a disincentive for importation. Second is that we are promoting policy that the government must buy only locally manufactured cars.”

Many local manufacturers have criticized the government over what they tagged the proposal to reverse the country’s automotive policy, designed to boost local production of vehicles in the country.

The automotive policy had led to an increased in duties and levies on imported transport vehicles and trucks to make locally made cars more attractive.

They said by slashing duties on importations of vehicles into the country under the proposed 2020 Finance Bill, the government will discourage local production and encouraging the flooding of the country with imported motor vehicles.

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