FG Eyes N150bn Windfall as Nigeria Moves to Formalise Vehicle Recycling Industry

Nigeria’s Federal Government has unveiled sweeping reforms aimed at transforming the country’s largely informal vehicle recycling sector into a regulated, revenue-generating industry, with projections showing more than N150 billion in annual earnings from 2026. The plan, announced by the National Automotive Design and Development Council, signals a major shift in how the country handles ageing vehicles, environmental protection, and industrial development within the automotive space.

The disclosure was made on Sunday by the Director-General of the NADDC, Joseph Osanipin, who revealed that the initiative would be anchored on a newly approved End-of-Life Vehicle programme. According to him, the policy is designed to address the growing problem of abandoned, unsafe, and polluting vehicles across Nigeria, while also unlocking significant economic value from materials that are currently wasted or recycled through unregulated channels.

For decades, Nigeria’s vehicle recycling ecosystem has operated almost entirely in the informal sector. Old cars, buses, trucks, and motorcycles that have outlived their usefulness are often dismantled in open yards by roadside mechanics and scrap dealers, with little regard for environmental standards, worker safety, or proper waste management. Hazardous materials such as engine oil, brake fluid, batteries, and plastics frequently end up contaminating soil and waterways, while reusable metals are sold cheaply without any structured value chain. The Federal Government believes the new programme can change this narrative.

Osanipin explained that the End-of-Life Vehicle policy would introduce a structured system for identifying, collecting, dismantling, recycling, and safely disposing of vehicles that are no longer fit for use. Central to the reform is a modest recycling fee to be paid by vehicle owners at the point of registration. The fund generated from this fee would be dedicated specifically to the environmentally sound disposal and recycling of vehicles once they reach the end of their operational life.

While the government has not yet disclosed the exact amount vehicle owners would be required to pay, officials insist the fee would be small enough not to discourage vehicle registration, but significant enough, when aggregated nationwide, to sustain the recycling programme and generate substantial revenue. With millions of vehicles currently on Nigerian roads and thousands more added every year, the authorities estimate that the scheme could yield over N150 billion annually by 2026.

Beyond revenue, the government is positioning the reform as a solution to several long-standing challenges facing Nigeria’s transport and environmental sectors. Old and poorly maintained vehicles are a major contributor to road accidents, air pollution, and traffic congestion. Many of these vehicles remain in circulation long after they would have been retired in more regulated markets. By creating incentives and a clear framework for taking unsafe vehicles off the road, the ELV programme is expected to improve road safety and reduce harmful emissions, particularly in major cities such as Lagos, Abuja, Port Harcourt, and Onitsha.

The policy also aligns with Nigeria’s broader industrialisation agenda. Proper vehicle recycling allows valuable materials such as steel, aluminium, copper, rubber, and certain plastics to be recovered and reused in manufacturing. The NADDC believes this could reduce the country’s dependence on imported raw materials, lower production costs for local manufacturers, and stimulate growth across related industries. In addition, the establishment of licensed recycling centres and processing plants could create thousands of new jobs, ranging from technical roles to logistics, compliance, and environmental management.

Osanipin noted that the reforms would bring Nigeria closer to global best practices in automotive regulation. Many developed and emerging economies already operate structured End-of-Life Vehicle systems, where manufacturers, importers, and consumers all play defined roles in ensuring vehicles are responsibly recycled. By adopting a similar framework, Nigeria hopes to make its auto sector more attractive to investors, particularly as the country seeks to expand local vehicle assembly and component manufacturing.

Industry stakeholders have reacted to the announcement with cautious optimism. Some automotive experts say formalising the recycling sector is long overdue, given the visible environmental damage caused by unregulated scrap operations. They argue that, if properly implemented, the programme could professionalise the industry and improve Nigeria’s standing in global environmental and manufacturing indices. Others, however, have urged the government to ensure transparency in the management of the recycling fund and to avoid placing additional financial burdens on ordinary Nigerians already grappling with high transportation and living costs.

There are also questions about enforcement, a familiar challenge for many public policies in Nigeria. Analysts point out that for the End-of-Life Vehicle programme to succeed, authorities must develop reliable systems for tracking vehicles from registration to disposal. This would likely require stronger collaboration between the NADDC, the Federal Road Safety Corps, state motor registries, customs authorities, and environmental agencies. Without effective coordination, critics warn, the policy risks becoming another well-intentioned reform undermined by weak implementation.

The government, however, remains confident that the reforms will be phased in carefully. According to the NADDC, the initial focus will be on building awareness, developing technical guidelines, licensing recycling operators, and engaging with state governments and the private sector. Over time, the programme is expected to expand, incorporating incentives for compliance and penalties for illegal dumping and unsafe dismantling practices.

The announcement comes at a time when Nigeria is under increasing pressure to balance economic growth with environmental responsibility. Rapid urbanisation, rising vehicle imports, and inadequate public transportation have all contributed to a surge in ageing vehicles on the roads. By turning vehicle recycling into a structured economic activity, the Federal Government hopes to demonstrate that environmental protection and revenue generation do not have to be mutually exclusive.

If successful, the End-of-Life Vehicle programme could mark a turning point for Nigeria’s automotive industry, converting what has long been seen as a nuisance and environmental hazard into a source of income, jobs, and industrial growth. With a projected N150 billion yearly inflow from 2026, the initiative stands as one of the most ambitious auto sector reforms in recent years, and its implementation will be closely watched by industry players, environmental advocates, and the wider public alike.