The Federal Government has announced plans to formalise Nigeria’s largely informal vehicle recycling sector, projecting annual revenues of more than ₦150 billion from 2026 as part of broader reforms to modernise the country’s automotive industry.

The National Automotive Design and Development Council (NADDC) disclosed this in a statement issued on Sunday, with its Director-General, Mr Joseph Osanipin, saying the initiative would be driven by a comprehensive End-of-Life Vehicle (ELV) programme already approved for implementation.

Osanipin explained that the policy would introduce a mandatory vehicle recycling fee payable at the point of registration, similar to practices in developed economies, to fund the environmentally sound disposal and recycling of vehicles that have reached the end of their useful lives.

“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 noted that Nigeria’s programme would follow the same model, acknowledging that the policy might initially face public resistance, but stressed that it would convert what is currently an environmental and safety burden into a major economic opportunity.

Osanipin said Nigeria already has a vibrant informal second-hand auto parts market, popularly known as the Belgian parts market, largely driven by concerns about the durability and quality of new components.
According to him, studies by the council showed that more than 85 per cent of components from end-of-life vehicles are reusable or recyclable, providing a strong foundation for a formal circular economy.

“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,” he said.
He added that beyond revenue generation, the vehicle recycling ecosystem would create thousands of jobs across dismantling, refurbishing, logistics and component resale segments.

The announcement comes amid a rebound in Nigeria’s vehicle import market. Recent data showed that the value of passenger motor car imports rose to about ₦1.01 trillion in the first nine months of 2025, up from 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 recovery gained momentum in the second half of the year, with a sharp rise in third-quarter import values offsetting slower activity earlier in the year.

While the rebound underscores the resilience of Nigeria’s auto market, particularly the fairly used (“Tokunbo”) segment, Osanipin said it also highlighted persistent challenges such as high landing costs, currency exposure and structural dependence on imports.

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

Osanipin said Nigeria was currently one of the few African countries without such a requirement, making it a destination of choice 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 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.

In a parallel push to future-proof the sector, Osanipin unveiled plans to promote the conversion of petrol- and diesel-powered vehicles to electric vehicles (EVs) and compressed natural gas (CNG) under the National Automotive Industry Development Plan (NAIDP).

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

“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 said.
Osanipin disclosed that the council had developed National Occupational Standards for EV maintenance and CNG retrofitting, with structured certification programmes expected to begin by 2026.

He added that Nigerian engineers and students were making 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.

Osanipin stressed that component manufacturing remains the key value driver in the automotive sector, noting that Nigeria spends more annually on tyres, brake pads, filters and batteries than on importing fully assembled vehicles.

He said the council was engaging stakeholders to address infrastructure, financing and policy bottlenecks facing component manufacturers, particularly as Nigeria positions itself to benefit from the African Continental Free Trade Area (AfCFTA).

The NADDC boss also revealed plans to transform the NAIDP from a policy framework into an Act of Parliament, disclosing that a draft Auto Industry Bill would soon be submitted to the National Assembly.

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

Acknowledging that some of the reforms could face resistance, Osanipin appealed to the media for support in explaining the policies to the public, describing 2026 as a pivotal year for Nigeria’s automotive industry transformation.