The Newly Introduced Compulsory Vehicle Recycling Fee in Nigeria 

The Federal Government of Nigeria has announced plans to introduce a one-time compulsory vehicle recycling fee that will apply to motorists and vehicle owners. This is set to commence in 2026. 

According to the National Automotive Design and Development Council, NADDC, the fee is part of broader reforms in the automotive sector aimed at modernising the industry and addressing environmental and waste management issues. Unlike ordinary taxes or duties, this is being framed as a recycling levy tied to managing and formalising how vehicles, especially those at the end of their useful life are dismantled, repurposed, or recycled.

Why Is The Government Proposing The Fee

1. To Formalise The Vehicle Recycling Market

Nigeria’s current vehicle recycling sector is largely informal. Old cars are scrapped by small operators with little regulation. The new fee is designed to create a formal ecosystem for end-of-life vehicle (ELV) disposal and recycling.

2. To Generate Revenue

The NADDC which is projecting the policy says it could yield significant revenue, estimated at over 150 billion naira annually from 2026 once fully implemented. These funds would help support the ELV programme and related industry reforms.

3. To Reduce Waste And Environmental Harm

By incentivising proper dismantling and recycling, the government aims to reduce abandoned vehicles, prevent environmental contamination (e.g., from oils and metals), and promote sustainability in the automotive lifecycle.

How It Fits With Broader Policies

This new vehicle recycling fee is not an isolated policy; it aligns with other recent government moves such as:

• Phasing out the importation of end-of-life and used vehicles, reducing older, polluting cars on Nigerian roads.
• Implementation of the National Auto Industry Development Policy, NAIDP), which prioritises local vehicle production, environmental standards, and a circular automotive economy.

These policies indicate a shift toward environmental sustainability and structured industrial growth in the auto sector.

What To Remember

The Federal Government is introducing a compulsory vehicle recycling fee starting in 2026 as part of automotive sector reforms. The fee is meant to generate revenue and formalise Nigeria’s vehicle recycling industry, supports environmental goals by encouraging proper disposal and recycling of old vehicles and It is part of broader initiatives under the ELV programme and NAIDP.

Details about how much it will cost and how it will be implemented are still emerging.