• ‘Tokunbo’ vehicles
Experts have cautioned that the federal government’s decision to slash the import duty on used vehicles, popularly known as Tokunbo vehicles, to five percent is unlikely to come without trade-offs.
However, the duty cut has been hailed by economists and industry operators as a timely intervention that could reduce transportation costs and provide much-needed relief for Nigerians grappling with stubborn inflation, reports Daily Independent.
Analysts say the policy may also usher in a period of tighter scrutiny at the nation’s ports as the Nigeria Customs Service (NCS) intensifies efforts to achieve its ambitious N11 trillion revenue target.
While the reduced tariff is expected to lower the landing cost of imported vehicles and ease pressure on transport fares, experts caution that the fiscal concession is unlikely to come without trade-offs.
“There is no such thing as a free fiscal lunch,” said Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE). According to Yusuf, governments that grant tax concessions often compensate by strengthening compliance mechanisms and plugging revenue leakages.
“The tariff reduction is commendable because it addresses the affordability challenge facing many Nigerians.
But Customs will naturally tighten enforcement to ensure that every legitimate revenue due to government is collected. Importers should expect stricter documentation, valuation and compliance checks,” he said.
The reduction comes at a time when inflation has significantly eroded household incomes, while higher fuel prices and exchange rate volatility have pushed transportation costs to record levels.
Vehicle prices have also risen sharply over the past two years as the depreciation of the naira increased import costs, making car ownership increasingly difficult for middle-income Nigerians.
Economic analysts believe that lowering import duties could stimulate demand, improve vehicle accessibility and reduce operating costs for commercial transport operators and small businesses.
Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, said fiscal measures that reduce the cost of productive assets are generally positive for the economy.
According to him, lower import duties on vehicles could help moderate transportation costs, but implementation remains critical.
“The policy can improve affordability if it is implemented transparently. However, government revenue objectives have not disappeared.
Customs will be under pressure to ensure that leakages are eliminated, which means compliance monitoring will become much stronger,” Rewane noted.
The Nigeria Customs Service has continued to receive increasingly ambitious revenue targets from the Federal Government as authorities seek to boost non-oil revenues amid declining fiscal space.
With an estimated N11 trillion collection target, trade experts believe Customs officers will become more aggressive in tackling undervaluation, false declarations, smuggling and other forms of revenue leakages.
Former President of the Association of National Accountants of Nigeria (ANAN), Dr. Sam Nzekwe, said the new tariff should be viewed as a social intervention rather than a revenue measure.
“The government is trying to reduce the burden on citizens who have been affected by inflation. But Customs also has a responsibility to meet revenue expectations.
Therefore, importers must ensure complete compliance because enforcement is likely to become stricter,” he said.
For Nigerians in the diaspora, who account for a significant share of used vehicle imports into the country, analysts say the message is unmistakable—ensure every document is accurate before shipping any vehicle.
Industry operators expect Customs to pay closer attention to invoices, vehicle identification numbers, declarations and valuation records to prevent abuse of the reduced tariff regime.
Executive Secretary of the Nigerian Shippers’ Council, Dr. Pius Akutah, recently stressed the importance of trade facilitation alongside revenue generation, noting that efficient cargo clearance remains critical to reducing logistics costs.
Maritime stakeholders argue that while the tariff reduction is a welcome development, port inefficiencies could still erode much of the expected benefit.
They point to terminal handling charges, shipping costs, exchange rate fluctuations and prolonged cargo clearance processes as additional factors contributing to high vehicle prices.
President of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Tochukwu Ezisi, urged Customs to ensure uniform implementation of the new tariff policy.
“The success of this initiative depends on transparency. If officers interpret the policy differently at various commands, the expected reduction in vehicle costs may not be achieved,” he said.
According to him, genuine importers should not be subjected to unnecessary delays simply because Customs is pursuing higher revenue targets.
Economic analysts say the challenge before policymakers is balancing consumer relief with fiscal sustainability.
Nigeria continues to grapple with rising debt service obligations, infrastructure financing needs and increasing public expenditure.
Against this backdrop, every tax concession inevitably reduces one source of government revenue, creating pressure on revenue-generating agencies to improve efficiency elsewhere.
“This is where technology becomes important,” Yusuf added.
“Instead of multiple physical inspections, Customs should rely more on digital risk assessment, intelligence and automation.
“That way, legitimate traders are not punished while those attempting to evade duties are identified.”
Analysts also argue that if the reduced tariff leads to a significant increase in vehicle import volumes, government could recover part of the forgone revenue through higher transaction volumes rather than higher tax rates.
This, they say, would represent a win-win outcome—lower costs for consumers and stronger overall revenue collections.
As implementation begins, importers, freight forwarders and vehicle dealers will be watching closely to see whether the promised reduction in costs translates into lower showroom prices.
For millions of Nigerians burdened by rising transport expenses, the five percent Tokunbo tariff offers hope of some relief. Yet, experts insist that importers should not mistake the concession for relaxed oversight.
With Customs under enormous pressure to climb the N11 trillion revenue mountain, compliance will become even more important.
The consensus among analysts is that while government has extended a compassionate hand through lower tariffs, the other hand will almost certainly tighten enforcement.
In the months ahead, transparency, accurate documentation and strict adherence to Customs regulations are expected to become the defining features of Nigeria’s new vehicle import regime.
