By Jeph Ajobaju, Chief Copy Editor
A combination of factors, internal and external, has led to imported vehicles costing more from today, making it more elusive the Nigerian dream of owning a home and a car in a country where public transport is not an attractive option.
Depending on the type of vehicle, price increase could be as much as 50 per cent based on the same rate of increase in terminal handling charges.
Two Roll On Roll Off (RORO) terminals at the Tin Can Island Port, Ports and Terminal Multipurpose Limited (PTML) as well as Five Star Logistics Terminal announced the increase three weeks ago, per reporting by The Guardian (Nigeria).
A circular issued by both operators said the rise would take effect from June 1. They blamed, among other factors, the rise in inflation and operational costs.
PTML, one of the biggest vehicle terminals, cited “the dramatic surge in inflation in 2020 and 2021, as well as the ever-increasing operational expenses incurred because of the particularly challenging port operational environment, which has had a huge impact on the company’s direct cost.
“PTML tariff has not been adjusted for a number of years now, and it has become impossible for the terminal to provide the same level of service as current prices,” the company explained in the circular, quoted by The Guardian.
Impact of economic slump
Nigeria recorded N1.28 trillion as the total value of ‘used vehicles’, popularly known as Tokunbo, and motorcycles imported between Q3 2019 – Q2 2020, a rise of 42 per cent against N899 billion in Q3 2018 – Q2 2019.
Despite the revised import duty for transport vehicles announced by the government in January, car dealers still face dismal patronage because of the economic slump.
The rise in import tariff takes a heavy toll on businesses and the cost of goods and services, according to a report on the website of the Nigeria Bureau of Statistics (NBS).
The report said imports decreased to N1,759,720.29 in December 2020 from N2,397,223.91 in November of 2020.
Value Added Tax (VAT), a federal tax, is charged at 7.5 per cent of the value of taxable goods and services. Import duty varies from 5 per cent to 60 per cent, averaging 12 per cent, and all imports are subject to a 7 per cent port surcharge and 5 per cent VAT.
Abuja has slashed import duties for tractors and transport vehicles, among others, but this has no positive effect on the operating environment as importers say they still pay huge charges, The Guardian adds.
The reduction of import duties in the 2020 Finance Bill is not yet implemented, even though the law came into effect on January 1, 2021.
Importers, car dealers, and freight forwarders have kicked against the 50 per cent increase in terminal handling charges, saying it will stoke inflation.
It will also worsen an economy still grappling with aftershocks of two recessions and drive importers and investors to patronise neighbouring countries.
Lack of consultation
Public Relations Officer of the Association of Nigerian Licensed Customs Agents (ANLCA) at PTML Terminal, Ayokunle Sulaiman, lamented that terminal handling, delivery, documentation, and demurrage charges have all been increased.
Said he: “There has been a 50 per cent increase in the charges including terminal documentation. For vehicles, terminal documentation was previously N10,000, it has now been increased to N15,000.
“Terminal handling charges and terminal delivery charges are the core aspects of the job, all other ones like demurrage are avoidable.
“For SUVs, we were paying N21,000 as terminal handling charges, now it has been increased to N33,000. For the same SUV, we were paying N3,600 as terminal delivery charges but it has been reviewed upwards to N7,500.”
Sulaiman said there was no consultation before terminal operators came up with the hike.
“If they were talking about increasing staff salary or employing more hands to enhance efficiency, we would be able to analyse it, we are humans. But you cannot just increase charges without giving us anything in form of efficiency.”
Inspired Cars Client Services Manager, Iwayeye Olatunji, said car dealers are having a tough time with sales, and buyers would find it even more difficult to buy cars.
“I bought a Nigerian used car for N3.7 million, which under the normal circumstance is not supposed to be more than N3.2 million. With this, I cannot sell this car for less and people would not want to buy,” he told The Guardian.
“Somebody that budgets to buy a car for N3 million and by the time he gets to the car shop, he sees it for N4 million, the person will not be able to buy and this will affect our business, which is based on turnover.”
Olatunji said prices of vehicles have risen by more than 15 per cent in a 12-month period. “Due to border closure, cars stopped coming from the borders, which made the prices of available ones go up.”
About this time last year, he recalled, a used Toyota Corolla (2005 model) sold for N1.2 million but now sells for about N1.6 million; the 2008 model went from a little over N2 million in 2020 to more than N3 million this year.
Government policy makes it expensive to import vehicles, Olatunji added.
Struggling to survive
Air Logistics, National Association of Government Approved Freight Forwarders (NAGAFF) National President, Segun Musa, said people are struggling to survive due to high inflation and government policies, and terminal operators are cashing in.
He said 50 per cent of terminal operators’ charges are from storage cost, which he blamed on the Nigerian Customs Service (NCS) for making containers stay at the port for 30 to 40 days, instead of seven working days.
In his view, all this would affect consumers, as businesses cannot be stopped from increasing their charges.
African Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON) National President, Frank Ogunojemite, added that while the economy is still reeling from the pandemic, the reason given by terminal operators does not justify increase in charges.
Ogunojemite warned that the increase will leave a huge effect on the economy as prices of commodities would rise even with low purchasing power.
Nigerian Shippers’ Council (NSC) Executive Secretary, Hassan Bello, said terminal operators have not increased charges in a long time due to intervention by the council, and there will be a dialogue with them to prevent any increase at this time.