A major shift is underway in Nigeria’s automotive industry as the Federal Government moves to formalise the country’s largely informal vehicle recycling ecosystem, with projected annual revenues exceeding N150bn from 2026. The initiative forms part of broader reforms aimed at modernising the auto sector, strengthening environmental safeguards, and unlocking new sources of economic value.
The plan was unveiled by the National Automotive Design and Development Council (NADDC), which confirmed that a comprehensive End-of-Life Vehicle (ELV) programme has received approval for implementation. According to the council, the programme is designed to address the growing challenge of abandoned and unroadworthy vehicles while transforming waste into a structured, revenue-generating industry.
Director-General of the NADDC, Joseph Osanipin, explained that the ELV policy would bring order to the recycling of vehicles that have reached the end of their useful lives. He described the current situation—where obsolete vehicles are often abandoned or dismantled informally—as both an environmental risk and a missed economic opportunity.
Drawing parallels with global best practices, Osanipin noted that in many developed economies, vehicle owners contribute to disposal and recycling costs at the point of registration. Nigeria’s model, he said, will adopt a similar approach, requiring a modest fee during vehicle registration to fund safe, environmentally responsible disposal and recycling. While acknowledging that the measure may initially face resistance, he stressed that it is essential for long-term sustainability.
Nigeria already operates a vibrant informal market for second-hand vehicle components, popularly known as the Belgian parts market. This market, according to the NADDC, thrives largely due to concerns about the quality, durability and cost of new spare parts. Studies conducted by the council indicate that more than 85 per cent of components from end-of-life vehicles are either reusable or recyclable, underscoring the strong potential for a structured circular economy.
Under the proposed framework, vehicle owners would be incentivised to hand in obsolete vehicles rather than abandon them. The formal recycling chain—covering dismantling, refurbishing, logistics and resale—could generate billions of naira annually while creating thousands of jobs across multiple segments of the value chain.
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 car imports climbed to about N1.01tn in the first nine months of 2025, compared with roughly N894bn in the same period a year earlier. The rebound, which gained momentum in the second half of the year, reflects improving foreign exchange stability and renewed confidence among importers.
However, the recovery has also highlighted longstanding structural challenges, including high landing costs, exposure to currency fluctuations and heavy dependence on imported vehicles—particularly fairly used, or “Tokunbo,” cars.
To curb the inflow of unroadworthy vehicles, the NADDC announced that from 2026, all used vehicles imported into Nigeria will be subject to mandatory pre-export certification. The measure is intended to prevent Nigeria from being used as a dumping ground for rusted or end-of-life vehicles, a practice Osanipin said has persisted due to weak regulatory barriers.
He revealed that exporters have previously admitted targeting Nigeria because of the high profits associated with shipping vehicles that would be rejected elsewhere. Under the new regime, exporters—not Nigerian consumers—will bear the cost of certification, ensuring greater transparency and accountability in the import process.
Beyond recycling and imports, the reforms also extend to future-proofing Nigeria’s automotive ecosystem. The NADDC disclosed 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).
As part of this transition, the council has launched extensive capacity-building programmes covering EV technology, vehicle conversion and alternative fuel systems. Training initiatives have been rolled out for regulators, technicians and industry stakeholders, while National Occupational Standards for EV maintenance and CNG retrofitting have already been developed. Structured certification programmes are expected to commence by 2026.
Osanipin also highlighted progress in local vehicle design and innovation, citing collaborative projects involving universities and private sector partners. These include locally developed tricycles, buses and electric campus shuttle vehicles, which he said demonstrate the growing capabilities of Nigerian engineers and students.
He emphasised that component manufacturing represents the true value driver in the automotive sector, noting that Nigeria spends more annually on items such as tyres, brake pads, filters and batteries than on importing complete vehicles. Efforts are underway, he said, to tackle infrastructure, financing and policy constraints facing component manufacturers, especially as Nigeria seeks to position itself competitively under the African Continental Free Trade Area.
To provide a stronger legal foundation for these reforms, the NADDC plans to push for the transformation of the NAIDP from a policy framework into an Act of Parliament. A draft Auto Industry Bill is expected to be presented to the National Assembly, reflecting the scale of investment and long-term commitment required in the sector.
While acknowledging that some of the reforms may face public pushback, Osanipin described 2026 as a turning point for Nigeria’s automotive industry, calling for broad stakeholder and media engagement to help communicate the objectives and long-term benefits of the changes.