Automotive Industry, News

How “Made in Kenya” Vehicles Will Boost Our Economy

South Africa’s auto­mo­bile sec­tor has cre­at­ed about 1.5 mil­lion direct jobs and an esti­mat­ed 5 mil­lion indi­rect jobs. Mean­while, the same sec­tor in Kenya has cre­at­ed a pal­try 100,000 direct jobs accord­ing to the sec­tor reports. This excludes sta­tis­tics of the motor­cy­cle sec­tor.  Since the 1990s when Kenya allowed the impor­ta­tion of eight years old vehi­cles, Kenyans have pur­chased approx­i­mate­ly 760,700 cars just between 2012 and 2020. These vehi­cles were esti­mat­ed to be worth Shs570.3 bil­lion. If the bulk of those vehi­cles had been assem­bled in Kenya, then these bil­lions would have been inject­ed into the local econ­o­my and cre­at­ed mil­lions of jobs. 

Oth­er African coun­tries have already embraced poli­cies that have boost­ed local man­u­fac­ture of vehi­cles. These coun­tries include South Africa, Tunisia, Nige­ria, Ghana and Morocco. 

Although Nige­ria has an annu­al demand of 720,000 vehi­cles, it only pro­duces 14,000 vehi­cles local­ly. As such, the pop­u­lous West African coun­try has a mas­sive oppor­tu­ni­ty for local pro­duc­tion of vehi­cles. Back to South Africa, the auto­mo­tive indus­try con­tributed 6.4% to South Africa’s econ­o­my, mak­ing it the country’s largest man­u­fac­tur­ing sector. 

As evi­denced by both South Africa and Nige­ria, the auto­mo­tive sec­tor is replete with eco­nom­ic prowess worth bil­lions. Report­ed­ly, there are only 42 vehi­cles per 1,000 peo­ple, which is the low­est motor­iza­tion rate in the world. Glob­al­ly, there are 182 vehi­cles per 1,000 peo­ple. Fur­ther to this, although Africa is home to 17% of the glob­al pop­u­la­tion, only 1.3% of the world’s vehi­cles ply African roads. 

Against this back­drop, time is ripe for Kenya’s auto­mo­tive sec­tor to be dras­ti­cal­ly revamped. This is exact­ly what the draft Nation­al Auto­mo­tive Pol­i­cy seeks to do. This Policy’s goal is to ‘pro­vide an enabling envi­ron­ment for auto­mo­tive indus­try play­ers to real­ize their full poten­tial and posi­tion Kenya as a major auto­mo­tive man­u­fac­tur­er.’ The pol­i­cy is now head­ed to par­lia­ment after approval by the cabinet. 

If this pol­i­cy is ful­ly enact­ed and imple­ment­ed, Kenya will begin strid­ing along in the foot­steps of Japan, the lead­ing car man­u­fac­tur­er in the world. Inter­est­ing­ly, Japan has part­ly achieved this fete through a decades-long col­lab­o­ra­tion between large automak­ers like Hon­da with dozens of SMEs that man­u­fac­tur­er auto parts. If Kenya fol­lows this mod­el as stip­u­lat­ed in the draft pol­i­cy, local man­u­fac­ture will receive a mas­sive boost as SMEs begin to pro­duce auto parts, which will tur­bo-charge the cre­ation of local jobs. 

On the vehi­cle impor­ta­tion front, Kenyans can cur­rent­ly import cars that are up to up to eight years old. The pro­posed auto­mo­tive pol­i­cy plans to reduce this pro­gres­sive­ly to three-year-old vehi­cles, by 2025. This will boost local­ly assem­bled vehi­cles, which will in turn set Kenya on the path­way that coun­tries like South Africa have already taken. 

How­ev­er, this phase-off should be under­tak­en through suf­fi­cient col­lab­o­ra­tion with stake­hold­ers like Kenya Auto Bazaar Asso­ci­a­tion (Kaba). As the country’s lead­ing sell­er of used cars, Kaba already has a skill set that will enable them to become agents of Orig­i­nal Equip­ment Man­u­fac­tur­ers (OEM) like Toy­ota. Fur­ther to this, Kaba can be an agency for spare parts and ser­vic­ing. In this regard, they can still reap finan­cial ben­e­fits despite fac­ing out of cheap import­ed cars. 

Anoth­er key stake­hold­er that should play a crit­i­cal role in the imple­men­ta­tion of the envi­sioned pol­i­cy is the Kenya Vehi­cle Man­u­fac­tur­ers Asso­ci­a­tion (KVMA). Con­sid­er­ing that a mul­ti­tude of SMEs will man­u­fac­ture auto parts for local­ly assem­bled vehi­cles, KVMA will be unique­ly placed to mar­shal the increas­ing auto cot­tage indus­try into a world-class qual­i­ty production. 

The new pol­i­cy also spells out a clear pref­er­ence for the Com­plete Knocked Down Kits (CKD) man­u­fac­tur­ing process. In this process, car man­u­fac­tur­ers will main­ly be allowed to ship CKDs and then assem­ble the same into com­plete cars there­by cre­at­ing unprece­dent­ed new jobs for our country.

Pres­i­dent Keny­at­ta has been very instru­men­tal in the devel­op­ment of this draft Nation­al Auto­mo­tive Pol­i­cy. With­in this con­text, he has set a chal­lenge for a local­ly made car that will cost less than a mil­lion Kenya shillings. We must ful­ly seize this chal­lenge even as we increas­ing­ly assem­ble more cars local­ly. That way, mil­lions of Kenyans will even­tu­al­ly earn liveli­hoods from clean­er vehi­cles. Think green, Act Green!

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About Dr. Kalua Green

He is the Chief Stew­ard of Green Africa Group, a con­glom­er­ate that was envi­sioned in 1991 to con­nect, pro­duce and impact var­i­ous aspi­ra­tions of human­i­ty through Sus­tain­able Mobil­i­ty & Safe­ty Solu­tions, Eco­pre­neur­ship & Agribusi­ness, Ship­ping & Logis­tics, Envi­ron­men­tal Pro­tec­tion Ini­tia­tives, as well as Hos­pi­tal­i­ty & fur­nish­ings sectors

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