Nigeria Charts a Course for Automotive Modernisation: Tapping into Vehicle Recycling and Driving Innovation
Nigeria is embarking on a significant transformation of its automotive industry, with ambitious plans to formalise the largely informal vehicle recycling market and generate substantial annual revenues. The Federal Government, through the National Automotive Design and Development Council (NADDC), aims to unlock over N150 billion annually from this sector starting in 2026, as part of a broader strategy to modernise and enhance the nation’s automotive landscape.
This initiative is underpinned by a newly approved comprehensive End-of-Life Vehicle (ELV) programme. Joseph Osanipin, Director-General of the NADDC, explained that the policy intends to convert vehicles that have reached the end of their operational lifespan from an environmental and safety concern into a significant economic asset.
Formalising Vehicle Disposal and Recycling
The proposed model mirrors practices in developed economies, where a small fee is incorporated into vehicle registration costs to cover eventual disposal and recycling. This approach ensures that responsible disposal is factored in from the outset of a vehicle’s life. Osanipin acknowledged that this might initially encounter public apprehension but stressed its long-term benefits.
Nigeria currently possesses a robust informal market for used auto parts, often referred to as the “Belgian parts” market. This thriving sector is driven by consumer concerns regarding the durability and quality of new automotive components. NADDC studies indicate that over 85 per cent of components from end-of-life vehicles are reusable or recyclable, providing a strong foundation for establishing 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,” Osanipin stated. “The circular economy associated with this will be worth billions of naira every year, if well managed.”
Beyond revenue generation, the formalised recycling ecosystem is projected to create thousands of employment opportunities. These jobs will span various segments, including dismantling, refurbishment, logistics, and the resale of salvaged components.
Rebound in Vehicle Imports and Curbs on Unroadworthy Vehicles
This strategic push for automotive reform coincides with a noticeable rebound in Nigeria’s vehicle import market. In the first nine months of 2025, the value of passenger motor car imports surged to approximately N1.01 trillion, a notable increase from roughly N894 billion in the corresponding period of the previous year. This resurgence is attributed to improved stability in the foreign exchange market and a restoration of confidence among importers.
While this recovery highlights the resilience of Nigeria’s auto market, particularly the used vehicle segment, it also brings persistent challenges into focus, such as high landing costs, currency fluctuations, and an inherent reliance on imports.
To address the influx of unroadworthy vehicles, the NADDC will implement mandatory pre-export certification for all used vehicles imported into Nigeria from 2026. This measure aims to prevent the dumping of rusted and end-of-life vehicles into the country. Osanipin highlighted that Nigeria is currently one of the few African nations lacking such a requirement, making it an attractive destination for exporters looking to offload substandard vehicles. He shared an anecdote of a foreign exporter who admitted to shipping eight containers of end-of-life vehicles to Nigeria due to its profitability.
“We will ensure that importers are held responsible so that whatever you are buying, you know what you are buying,” Osanipin asserted, clarifying that the cost of this certification will be borne by the exporters, not Nigerian consumers.
Future-Proofing the Sector: Electrification and Alternative Fuels
In parallel, the NADDC is actively pursuing initiatives to future-proof the automotive sector by promoting the conversion of petrol and diesel-powered vehicles to electric vehicles (EVs) and those running on compressed natural gas (CNG). This aligns with the objectives of the National Automotive Industry Development Plan (NAIDP).
Extensive training programmes on EV technology, vehicle conversion, and alternative fuel systems have been initiated for both regulatory bodies and industry stakeholders. “Capacity building is one of the major pillars of the NAIDP,” Osanipin stated. “We have carried out training on vehicle conversion from PMS and diesel to CNG, as well as on electric vehicles.”
The council has also developed National Occupational Standards for EV maintenance and CNG retrofitting, with structured certification programmes slated to commence by 2026.
Fostering Local Innovation and Component Manufacturing
Nigerian engineers and students are reportedly making significant strides in local vehicle design. Projects involving tricycles, buses, and electric campus shuttle buses, developed in collaboration with 12 universities and private sector partners, showcase this progress. “We want what is taught in our institutions to reflect industry realities,” Osanipin commented. “Producing even a few world-class auto engineers locally will have a significant impact on the economy.”
The NADDC chief underscored that component manufacturing represents the true value driver within the automotive sector. Nigeria’s annual expenditure on tyres, brake pads, filters, and batteries surpasses its spending on importing complete vehicles. The council is actively engaging stakeholders to dismantle infrastructure, financing, and policy obstacles hindering component manufacturers, particularly as Nigeria prepares to leverage opportunities within the African Continental Free Trade Area (AfCFTA).
Legislative Backing for Automotive Reforms
To solidify these reforms, plans are underway to elevate the NAIDP from a policy document to an Act of Parliament. A draft Auto Industry Bill is expected to be presented to the National Assembly soon. “Investment in the auto sector is huge,” Osanipin remarked. “They will need an Act.”
Recognising that some of these reforms may face initial resistance, Osanipin appealed to the media for their crucial role in communicating the rationale and benefits of these policies to the public. He described 2026 as a pivotal year that will mark a significant transformation for Nigeria’s automotive industry.
