FG Targets Over ₦150bn Yearly Revenue from Vehicle Recycling as Auto Sector Reforms Begin in 2026

The Federal Government has announced ambitious plans to unlock over ₦150 billion in annual revenue from Nigeria’s largely informal vehicle recycling market starting from 2026, as part of far-reaching reforms aimed at modernising and restructuring the country’s automotive industry.

The plan, anchored on a comprehensive End-of-Life Vehicle (ELV) programme, was disclosed by the National Automotive Design and Development Council (NADDC) in a statement issued on Sunday. The Director-General of the council, Joseph Osanipin, said the policy has already received approval for implementation and would fundamentally change how obsolete vehicles are managed in Nigeria.

Turning Scrap into Economic Value

Speaking on the initiative, Osanipin explained that the programme is designed to formalise the recycling of vehicles that have reached the end of their useful lives, converting what is currently an environmental, safety and urban nuisance into a structured economic opportunity.

“In developed countries, when you buy a new vehicle, during registration, you make a payment towards the disposal of that vehicle when it reaches the end of its life. When it gets to the end of its life, somebody has to be responsible for the disposal,” he said.

According to him, Nigeria will adopt a similar framework, introducing a modest fee at the point of vehicle registration to fund environmentally responsible disposal and recycling. While he acknowledged that the policy could face initial public resistance, Osanipin stressed that the long-term benefits far outweigh the concerns.

Akahi News gathered that the government sees the ELV programme as a critical pillar for building a circular economy in the automotive sector, where waste is minimised and value is continuously extracted from used materials.

Harnessing the Informal “Belgian Parts” Market

Osanipin noted that Nigeria already operates a vibrant informal second-hand auto parts market, popularly known as the Belgian parts market, driven largely by concerns over the durability and quality of new components.

Studies conducted by the NADDC, he revealed, showed that over 85 per cent of components from end-of-life vehicles remain reusable or recyclable, providing a strong foundation for a formalised recycling ecosystem.

“If someone has an alternative, instead of abandoning vehicles by the roadside, you can turn them in and still make something out of them. The circular economy associated with this will be worth billions of naira every year, if well managed,” Osanipin said.

Beyond revenue, he added that the ecosystem would create thousands of jobs across dismantling, refurbishing, logistics, component resale and related services, significantly boosting employment in the industrial value chain.

Auto Import Rebound Highlights Need for Reform

The announcement comes amid a noticeable rebound in Nigeria’s vehicle import market in 2025. According to figures earlier reported by The Punch, the value of passenger motor car imports rose to about ₦1.01 trillion in the first nine months of 2025, compared with roughly ₦894 billion in the same period last year.

Data from the National Bureau of Statistics (NBS) showed that the recovery gained momentum in the second half of the year, with the third quarter recording a sharp rise that offset slower activity earlier in 2025.

Akahi News learnt that while the rebound underscores the resilience of Nigeria’s auto market—particularly the fairly used, or Tokunbo, segment—it also exposes persistent challenges such as high landing costs, foreign exchange risks and deep structural dependence on imports.

Mandatory Certification to Stop Dumping of Old Vehicles

As part of the reforms, the NADDC will introduce mandatory pre-export certification for all used vehicles imported into Nigeria from 2026. The move is aimed at curbing the dumping of rusted and end-of-life vehicles into the country.

Osanipin disclosed that Nigeria is currently one of the few African countries without such a requirement, making it an attractive destination for exporters seeking to offload unroadworthy vehicles.

He recounted a meeting with a foreign exporter who admitted shipping eight containers of end-of-life vehicles to Nigeria simply because it offered the “highest profit.”

“We will ensure that importers are held responsible so that whatever you are buying, you know what you are buying,” he said, adding that the cost of certification would be borne by exporters, not Nigerian consumers.

Transition to EVs and Alternative Fuels

In a parallel effort to future-proof the industry, Osanipin unveiled plans to accelerate the conversion of petrol and diesel vehicles to electric vehicles (EVs) and compressed natural gas (CNG), in line with the National Automotive Industry Development Plan (NAIDP).

He said the council has already commenced extensive training programmes on EV technology, vehicle conversion and alternative fuel systems for regulators and industry players.

“Capacity building is one of the major pillars of the NAIDP. We have carried out training on vehicle conversion from PMS and diesel to CNG, as well as on electric vehicles,” he stated.

The NADDC has also developed National Occupational Standards for EV maintenance and CNG retrofitting, with structured certification programmes expected to begin by 2026.

Local Innovation and Component Manufacturing

Osanipin highlighted growing progress in local vehicle design, citing projects involving tricycles, buses and electric campus shuttle buses developed in collaboration with 12 universities and private sector partners.

“We want what is taught in our institutions to reflect industry realities. Producing even a few world-class auto engineers locally will have a significant impact on the economy,” he said.

He stressed that component manufacturing remains the real value driver in the automotive industry, noting that Nigeria spends more annually on tyres, brake pads, filters and batteries than on importing complete vehicles.

Akahi News gathered that the council is engaging stakeholders to resolve infrastructure, financing and policy bottlenecks confronting component manufacturers, especially as Nigeria positions itself to benefit from the African Continental Free Trade Area (AfCFTA).

Towards an Auto Industry Act

In a significant policy shift, Osanipin revealed plans to transform the NAIDP from a policy framework into an Act of Parliament, announcing that a draft Auto Industry Bill would soon be presented to the National Assembly.

“Investment in the auto sector is huge. They will need an Act,” he said.

While acknowledging that some of the reforms may face pushback, Osanipin appealed to journalists and the media to help explain the policies to Nigerians.

“When the pushback comes, we need you to explain to Nigerians what we are trying to do and why,” he said, describing 2026 as a pivotal year for Nigeria’s automotive industry transformation.

Akahi News will continue to monitor developments around the ELV programme and broader auto sector reforms as implementation draws closer.

By Joseph Iyaji | Akahi News
Joseph Iyaji is a journalist, educator, and founder of Akahi G. International, Akahi Tutors, and Akahi News. Read more about him here.

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