For years, the imported used car—popularly known as 'Tokunbo'—has been the engine of mobility for the average Nigerian household. Since we don't produce enough cars locally, these fairly used vehicles from places like the US and Europe filled the crucial gap, offering a lifeline for business, family, and personal transport.
But today, the Tokunbo market is in the middle of a massive crisis. What was once an affordable necessity has turned into a luxury, thanks to a brutal combination of a volatile Foreign Exchange (FX) rate and ever-increasing import duties. Car ownership is now a distant dream for many, sending painful ripple effects across the entire Nigerian economy.
The Double Whammy: FX and Import Duties
The core of this crisis lies in how Tokunbo cars get to our shores. They are purchased in foreign currency, primarily the US dollar, and then subject to customs clearance charges when they arrive.
1. The FX Nightmare 💸
Nigeria's heavy reliance on imports means the price of everything, from rice to raw materials, is tied to the exchange rate. For car importers, a weakening Naira is a direct increase in cost.
When the Naira significantly depreciates against the Dollar, the cost of purchasing a vehicle overseas simply skyrockets. For example, a car that cost $\$5,000$ to buy and ship a few years ago might have been cleared with a lower Naira equivalent. Today, that same $\$5,000$ demands a far greater sum of Naira, often leading to a doubling or even tripling of the car's initial Naira price.
Importers have no choice but to transfer this increased cost to the final buyer. The currency volatility also makes planning impossible; a dealer might pay a certain rate to buy a car, only for the rate to worsen by the time the car lands at the port, leading to unpredictable and massive losses or huge price hikes.
2. The Weight of Import Duties 🚧
On top of the FX struggle, the government's various duties and levies on imported vehicles—including high tariffs, the Import Adjustment Tax (IAT) levy, and other port charges—add another hefty layer to the cost.
While these policies are often intended to encourage local assembly and manufacturing, in reality, they just inflate the final price of the imported used cars that currently dominate the market. Dealers lament that even when a used car is bought cheaply, the cost of clearing it at the port—which includes duties, levies, and multiple handling charges—can sometimes be more than the cost of the car itself!
The Impact on the Average Nigerian Household
The result of this double whammy is a catastrophic spiral in car prices. Vehicles that sold for $\text{₦}5$ million just a couple of years ago are now priced at $\text{₦}10$ million or more. This massive jump has pushed car ownership far out of reach for the vast majority of the middle and lower-income class.
- Financial Strain: A car is often a non-negotiable tool for work, school, and daily life. As prices surge, families who desperately need a vehicle are forced to delay the purchase indefinitely. For those who manage to buy, it means diverting a huge chunk of their life savings or taking on crippling debt.
- The Rise of 'Nigerian-Used' Cars: The affordability crunch has led to a boom in the market for locally pre-owned vehicles—cars that have already been in Nigeria for many years. Buyers are turning to these older, often worn-out cars as the only viable option. While they are cheaper than Tokunbo, they carry higher maintenance costs and greater risk of breakdown, which further strains household budgets.
- Economic Bottleneck: When transport costs increase, the cost of doing business, moving goods, and getting to work all increase. This fuels general inflation, making life harder for everyone. From the small-scale entrepreneur who uses a car for deliveries to the civil servant commuting daily, the crisis in the Tokunbo market slows down the entire economy.
The dream of a simple, reliable car to ease the burden of Nigerian life is fading fast. Until the Naira stabilises and the government re-evaluates the impact of its import duties, the road to mobility will remain blocked by a financial roadblock few can afford to cross.
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