FG to Roll Out Mandatory Vehicle Recycling Fee from 2026
The Federal Government has announced plans to introduce a mandatory vehicle recycling fee beginning in 2026, a move expected to generate more than ₦150 billion annually while formalising Nigeria’s largely informal auto recycling sector.
The initiative 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 would be implemented under a comprehensive End-of-Life Vehicle (ELV) programme already approved by the Federal Government.
According to Osanipin, the programme is designed to address environmental and safety concerns associated with abandoned and ageing vehicles, while unlocking significant economic value from structured recycling.
“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.
He explained that Nigeria’s model would follow a similar approach, with a modest fee charged at the point of vehicle registration.
The proceeds would be used to fund environmentally responsible disposal and recycling of vehicles, a step he admitted could initially face resistance from the public.
Osanipin noted that Nigeria already operates a vibrant informal market for second-hand vehicle parts, popularly known as the “Belgian parts” market, largely driven by concerns over the durability and quality of some new components.
Studies conducted by the NADDC, he said, revealed that more than 85 per cent of components from end-of-life vehicles are either reusable or recyclable, providing a solid base for a structured circular economy in the automotive sector.
“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 generation, he added that the formal recycling ecosystem would create thousands of jobs across dismantling, refurbishing, logistics and component resale value chains.
The announcement comes amid a recovery in Nigeria’s vehicle import market. Recent data showed that the value of passenger motor vehicle imports rose to about ₦1.01 trillion in the first nine months of 2025, compared with roughly ₦894 billion in the same period of 2024, reflecting improved foreign exchange stability and renewed importer confidence.
Figures from the National Bureau of Statistics indicated that the rebound gained momentum in the second half of the year, with the third quarter recording a sharp increase that offset weaker activity earlier in 2025.
While the recovery highlights the resilience of Nigeria’s auto market—particularly the fairly used, or “Tokunbo,” segment—it also exposes lingering challenges such as high landing costs, currency risks and heavy dependence on imports.
As part of broader reforms, the NADDC also plans to introduce mandatory pre-export certification for all used vehicles imported into Nigeria from 2026.
Osanipin said the measure is aimed at preventing the dumping of rusted and end-of-life vehicles in the country, noting that Nigeria is currently among the few African nations without such a requirement.
