The Federal Government has announced plans to introduce a mandatory vehicle recycling fee from 2026 as part of wide-ranging reforms aimed at modernising Nigeria’s automotive industry. The initiative is expected to generate over ₦150 billion annually while also addressing environmental, safety, and economic challenges linked to abandoned and ageing vehicles.
The National Automotive Design and Development Council (NADDC) disclosed this in a statement issued on Sunday. The Director-General of the council, Joseph Osanipin, said the policy would be implemented through a comprehensive End-of-Life Vehicle (ELV) programme that has already been approved by the government.
According to Osanipin, the programme is designed to formalise vehicle recycling in Nigeria, a sector that is currently dominated by informal activities. He said the new system would turn what is now an environmental and public safety problem into a major source of revenue and job creation.
“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,” Osanipin said. “When it gets to the end of its life, somebody has to be responsible for the disposal.”
He explained that Nigeria plans to adopt a similar model. Under the new policy, vehicle owners will pay a small recycling fee at the point of registration. The money will be used to support the safe dismantling, recycling, and disposal of vehicles that are no longer roadworthy.
Osanipin acknowledged that the policy may face resistance from the public at the early stage, especially due to concerns about additional costs. However, he stressed that the long-term benefits far outweigh the short-term discomfort.
Nigeria currently struggles with thousands of abandoned vehicles on roadsides, in mechanic workshops, and in open spaces. Many of these vehicles are old, damaged, and unsafe, posing risks to public health, the environment, and road safety.
The NADDC boss said Nigeria already has a strong informal market for used vehicle parts, popularly known as the “Belgian parts” market. This market thrives because many Nigerians believe used parts are more durable than new ones.
According to studies by the council, over 85 per cent of parts from end-of-life vehicles are either reusable or recyclable. Osanipin said this provides a strong foundation for building a formal recycling and circular economy system.
“If someone has an alternative, instead of abandoning vehicles by the roadside, you can turn them in and still make something out of them,” he said. “The circular economy associated with this will be worth billions of naira every year, if well managed.”
Beyond revenue generation, the government believes the programme will create thousands of jobs across different segments of the value chain. These include vehicle dismantling, parts refurbishing, logistics, recycling plants, and component resale.
The announcement comes at a time when Nigeria’s vehicle import market is showing signs of recovery. Recent data indicate that the value of passenger vehicle imports rose to about ₦1.01 trillion in the first nine months of 2025, up from roughly ₦894 billion during the same period in 2024.
Figures from the National Bureau of Statistics show that the rebound became more noticeable in the second half of the year, with the third quarter recording a sharp increase in import values. This growth is linked to improved foreign exchange stability and renewed confidence among importers.
Despite the recovery, the sector still faces major challenges. These include high import costs, exposure to foreign exchange risks, and heavy dependence on imported vehicles, especially fairly used ones, commonly called “Tokunbo.”
To address these issues, the NADDC announced that from 2026, all used vehicles imported into Nigeria must undergo mandatory pre-export certification. This measure is aimed at stopping the dumping of rusted, damaged, and end-of-life vehicles into the country.
Osanipin said Nigeria is currently one of the few African countries without such a certification requirement, making it an attractive destination for exporters seeking to dispose of unroadworthy vehicles.
He recalled a meeting with a foreign exporter who admitted sending eight containers of end-of-life vehicles to Nigeria 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,” Osanipin said. He added that the cost of certification would be paid by exporters, not Nigerian buyers.
In addition to recycling and import controls, the government is also focusing on the future of mobility. Osanipin revealed plans to promote 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 started training programmes on EV technology, vehicle conversion, and alternative fuel systems for regulators, technicians, and industry players.
“Capacity building is one of the major pillars of the NAIDP,” he said. “We have carried out training on vehicle conversion from PMS and diesel to CNG, as well as on electric vehicles.”
Osanipin disclosed that national standards have been developed for EV maintenance and CNG conversion. Structured certification programmes for technicians are expected to begin by 2026.
He also highlighted progress in local vehicle design and innovation. According to him, Nigerian engineers and students are working on projects such as tricycles, buses, and electric campus shuttle buses in partnership with 12 universities and private companies.
“We want what is taught in our institutions to reflect industry realities,” he said. “Producing even a few world-class auto engineers locally will have a significant impact on the economy.”
Osanipin stressed that real value in the automotive sector lies in component manufacturing. He noted that Nigeria spends more money importing tyres, brake pads, batteries, and filters each year than it does importing complete vehicles.
The council is working with stakeholders to address challenges facing component manufacturers, including poor infrastructure, limited access to finance, and policy gaps. This effort is also linked to Nigeria’s participation in the African Continental Free Trade Area, which offers opportunities for regional exports.
Finally, Osanipin revealed plans to turn the NAIDP into an Act of Parliament. He said a draft Auto Industry Bill would soon be submitted to the National Assembly to provide legal backing and stability for investments in the sector.
“Investment in the auto sector is huge. They will need an Act,” he said.
While admitting that some reforms may face pushback, Osanipin appealed to the media to help explain the policies to Nigerians. He described 2026 as a turning point for Nigeria’s automotive industry and urged public support for the changes aimed at long-term growth, safety, and environmental protection.