Nigeria is on the brink of a far-reaching transformation of its automotive sector as the Federal Government prepares to introduce a mandatory vehicle recycling fee from 2026, a policy move projected to unlock over ₦150 billion annually while reshaping how vehicles are imported, used, retired, and recycled across the country. The initiative, which forms part of a broader reform agenda under the National Automotive Industry Development Plan (NAIDP), marks the first coordinated attempt to bring Nigeria’s largely informal vehicle recycling ecosystem under a regulated, revenue-generating, and environmentally sustainable framework.
The announcement was made public by the National Automotive Design and Development Council (NADDC), the apex regulatory body for Nigeria’s automotive industry, in a statement issued on Sunday. According to the council, the proposed recycling fee will be anchored on a comprehensive End-of-Life Vehicle (ELV) programme that has already received formal approval and is now moving toward phased implementation.
At the centre of the policy is a simple but far-reaching idea: every vehicle sold and registered in Nigeria should have a clearly defined and responsibly funded exit plan for when it reaches the end of its useful life. In practical terms, this means that from 2026, vehicle owners will pay a modest recycling fee at the point of registration, a contribution that will later finance the environmentally sound dismantling, disposal, and reuse of vehicle components when the vehicle becomes obsolete.
Speaking on the rationale behind the initiative, NADDC Director-General, Joseph Osanipin, said Nigeria can no longer afford to ignore the environmental, economic, and safety risks posed by abandoned, dilapidated, and unroadworthy vehicles scattered across highways, mechanic villages, residential streets, and open spaces nationwide.
“What we are doing is what every developed automotive market already does,” Osanipin explained. “When you buy a vehicle in those countries, you pay a small fee during registration to cover its disposal at the end of its life. When that vehicle is no longer roadworthy, someone must be responsible for how it is dismantled, recycled, or disposed of.”
Nigeria, he noted, has for decades operated without any structured end-of-life vehicle policy, allowing the problem to grow unchecked. As a result, the country has become a magnet for ageing vehicles from across the world, many of which eventually end up abandoned, cannibalised, or left to decay in ways that endanger public health and the environment.
Under the proposed framework, Osanipin said, the government intends to convert what is currently a national liability into a major economic opportunity. By formalising vehicle recycling, Nigeria can create a structured circular economy that generates revenue, creates jobs, reduces environmental pollution, and supports local manufacturing.
Although the policy will require Nigerians to pay an additional fee when registering vehicles, the NADDC chief acknowledged that public resistance is inevitable, especially in a country grappling with rising living costs. However, he insisted that the long-term benefits far outweigh the short-term discomfort.
“We know that people may push back initially,” he said. “But if someone has an alternative to abandoning vehicles by the roadside, and instead can turn them in and still earn something from them, then we are solving multiple problems at once.”
According to studies conducted by the council, more than 85 per cent of components from end-of-life vehicles remain reusable or recyclable. Engines, gearboxes, alternators, wiring systems, tyres, batteries, body panels, and even electronic components can be refurbished, resold, or recycled for raw materials. This reality already underpins Nigeria’s thriving but informal second-hand auto parts market, popularly known as the “Belgian parts” market.
Osanipin said the dominance of second-hand parts in Nigeria is not accidental. It is driven largely by concerns over the durability, quality, and cost of new components, many of which are imported. In effect, Nigerians have already built a de facto circular auto economy, but without regulation, standards, or proper environmental safeguards.
“What we want to do now is to formalise what already exists,” he said. “If well managed, the circular economy associated with vehicle recycling will be worth billions of naira every year.”
Beyond revenue, the government expects the recycling ecosystem to create thousands of direct and indirect jobs across dismantling yards, refurbishment workshops, logistics networks, materials recovery plants, and component resale hubs. For a country facing chronic youth unemployment, the automotive recycling value chain represents an untapped labour-intensive sector with nationwide reach.
The timing of the announcement is significant. Nigeria’s vehicle import market is showing signs of renewed momentum after a difficult period marked by foreign exchange volatility and high import costs. Recent data indicates that passenger motor vehicle imports rebounded strongly in 2025, reflecting improved confidence among importers and consumers.
According to figures previously reported by The PUNCH, the value of passenger car imports rose to approximately ₦1.01 trillion in the first nine months of 2025, compared to about ₦894 billion during the same period in 2024. Data from the National Bureau of Statistics shows that the recovery was particularly pronounced in the third quarter of the year, when import values surged sharply after sluggish activity in the first half.
The rebound underscores the resilience of Nigeria’s auto market, especially the fairly used, or “Tokunbo,” segment, which remains the dominant source of vehicle supply for most Nigerians. However, it also highlights persistent structural challenges, including heavy dependence on imports, exposure to currency fluctuations, and the absence of strict quality controls on incoming used vehicles.
It is against this backdrop that the Federal Government plans to introduce another major reform from 2026: mandatory pre-export certification for all used vehicles imported into Nigeria. The measure is designed to stop Nigeria from being used as a dumping ground for rusted, accident-damaged, or end-of-life vehicles that no longer meet roadworthiness standards in their countries of origin.
Osanipin revealed that Nigeria is currently one of the few African countries without a compulsory pre-export inspection regime for used vehicles, a gap that has made it attractive to exporters seeking to maximise profits by offloading substandard units.
He recounted a striking encounter with a foreign exporter who openly admitted shipping eight containers of end-of-life vehicles to Nigeria simply because it offered the “highest profit.”
“That is unacceptable,” Osanipin said. “We will ensure that importers are held responsible so that whatever you are buying, you know exactly what you are buying.”
Under the new system, exporters will bear the cost of certification, ensuring that Nigerian consumers are not saddled with additional financial burdens. The certification process will verify vehicle age, mechanical condition, emissions compliance, and structural integrity before shipment, effectively filtering out vehicles that should never be on Nigerian roads.
The import controls are expected to work in tandem with the End-of-Life Vehicle programme. By tightening entry standards while formalising exit mechanisms, the government hopes to stabilise the quality of Nigeria’s vehicle fleet over time, reducing accidents, emissions, and roadside breakdowns.
In parallel with recycling and import reforms, the NADDC is also accelerating efforts to future-proof Nigeria’s automotive sector through alternative energy adoption. Osanipin confirmed that the council is pushing aggressively for the conversion of petrol and diesel-powered vehicles to compressed natural gas (CNG) and electric vehicle (EV) platforms, in line with national energy transition goals.
According to him, capacity building is a cornerstone of the NAIDP. Over the past year, the council has conducted extensive training programmes for regulators, technicians, engineers, and industry players on EV technology, vehicle conversion, and alternative fuel systems.
“We have carried out training on converting vehicles from PMS and diesel to CNG, as well as on electric vehicles,” he said.
To institutionalise these skills, the NADDC has developed National Occupational Standards for EV maintenance and CNG retrofitting. Structured certification programmes based on these standards are expected to commence by 2026, creating a pipeline of locally certified technicians capable of supporting Nigeria’s energy transition.
Osanipin also highlighted growing collaboration between the council, universities, and private sector partners on indigenous vehicle design and innovation. Nigerian engineers and students, he said, are already developing tricycles, buses, and electric campus shuttle buses through projects involving 12 universities.
“We want what is taught in our institutions to reflect industry realities,” he said. “If we can produce even a few world-class auto engineers locally, the impact on the economy will be significant.”
Beyond vehicle assembly, the NADDC is shifting attention to component manufacturing, which Osanipin described as the real value driver in the automotive industry. He revealed that Nigeria spends more annually on importing components such as tyres, brake pads, filters, and batteries than on importing fully built vehicles.
This imbalance, he said, represents a massive missed opportunity for local manufacturing. To address it, the council is engaging stakeholders to tackle infrastructure deficits, financing constraints, and policy bottlenecks facing component producers, particularly as Nigeria positions itself to leverage opportunities under the African Continental Free Trade Area.
In a further signal of the government’s long-term commitment, Osanipin disclosed plans to transform the NAIDP from a policy framework into binding legislation. A draft Auto Industry Bill, he said, would soon be presented to the National Assembly.
“Investment in the auto sector is huge,” he said. “They will need an Act.”
Acknowledging that the scale of the reforms would inevitably provoke resistance, Osanipin appealed to the media to play a constructive role in public education.
“When the pushback comes, we need you to explain to Nigerians what we are trying to do and why,” he said.
With mandatory recycling fees, stricter import controls, expanded local capacity, and a push toward cleaner energy, 2026 is shaping up to be a watershed year for Nigeria’s automotive industry. Whether these reforms succeed will depend not only on policy design, but on public understanding, stakeholder cooperation, and consistent implementation.
What is clear, however, is that the era of an unregulated, waste-heavy automotive ecosystem is drawing to a close. In its place, the Federal Government is betting on a circular, modernised auto industry—one capable of generating jobs, revenue, and environmental benefits in equal measure.
