How The Automotive Industry Can Drive Kenya’s Economic Revival

Mil­lions of vehi­cles snake their way on our roads dai­ly as Kenyans trav­el to and from work. As much as this leads to the nev­er-end­ing traf­fic jams, it also sig­ni­fies immense oppor­tu­ni­ty in Kenya’s auto­mo­tive sector.

Accord­ing to Nation­al Safe­ty and Trans­port Author­i­ty (NTSA) by the end of August 2022 Kenya had 4,382,335 reg­is­tered vehi­cles out of which 2,782,102 are motor­cy­cles. The dif­fer­ence there­fore includes per­son­al vehi­cles, trac­tors, heavy machin­ery, trail­ers, com­mer­cial vehi­cles and three wheelers

Obvi­ous­ly, most of these vehi­cles are import­ed. It is time to over­haul Kenya’s auto­mo­tive sec­tor by increas­ing­ly choos­ing to man­u­fac­ture local­ly. Doing so invites three over­whelm­ing oppor­tu­ni­ties name­ly: Job cre­ation, Strength­en­ing the val­ue of our local cur­ren­cy through increased exports and reduc­tion on input and, Diver­si­fi­ca­tion of Kenyan exports by expand­ing the auto­mo­tive export basket.

Thank­ful­ly, this jour­ney has been gal­va­nized by the Nation­al Auto­mo­tive Pol­i­cy. It has laid out an enabling envi­ron­ment for auto­mo­tive indus­try play­ers to ‘real­ize their full poten­tial and posi­tion Kenya as a major auto­mo­tive man­u­fac­tur­er.’ The Gov­ern­ment must ensure its full imple­men­ta­tion by set­ting up the Nation­al Auto­mo­tive Council.

Thrilling­ly as part of Africa’s Con­ti­nen­tal Free Trade Area (AfCF­TA) Kenya is now export­ing auto­mo­tive bat­ter­ies to Ghana, Malawi and the East African Com­mu­ni­ty. Dur­ing a recent Kenya Asso­ci­a­tion of Man­u­fac­tur­ers (KAM) Con­fer­ence attend­ed by Pres­i­dent Ruto it emerged that Kenya has now become a net exporter of bat­ter­ies hav­ing export­ed 60% and import­ed 40% of the pro­duced bat­ter­ies. This proves that Kenya can be a man­u­fac­tur­ing pow­er­house in the auto­mo­tive sector.

Evi­dent­ly, The Gov­ern­ment has a huge role to play in this quest for auto­mo­tive suprema­cy in Africa. For instance, in May, the gov­ern­ment banned impor­ta­tion of sec­ond-hand bus­es and trucks. This will boost the local auto assem­bly indus­try. In con­sul­ta­tion with all stake­hold­ers, a sim­i­lar ban should be extend­ed to all com­mer­cial vehi­cles. Such is the leg­isla­tive action that will mul­ti­ply invest­ment into the local auto­mo­tive sec­tor and cre­ate 300,000 new jobs in local assem­bly and parts manufacturing.

Accord­ing to KAM Kenya has an installed capac­i­ty of assem­bling 96,000 com­mer­cial vehi­cles per year but we are only assem­bling 12,000 vehi­cles. This short­com­ing must be addressed imme­di­ate­ly. As report­ed dur­ing the recent KAM con­fer­ence Africa’s demand for vehi­cles is at 5 mil­lion units per year yet we only man­u­fac­ture and assem­ble 1.2 mil­lion units. Kenya must take full advan­tage of this lucra­tive vehi­cle mar­ket. Addi­tion­al­ly accord­ing to the IEA Tech­nol­o­gy report of Sep­tem­ber 2022 by 2030 EVs will rep­re­sent 60% of vehi­cles sold glob­al­ly and there­fore the jour­ney start­ed by Autopax lim­it­ed of pro­duc­ing elec­tric vehi­cles local­ly for African mar­ket ought to be sustained.

The motor­cy­cle sub-sec­tor is also ripe for unprece­dent­ed growth. Fuel­ing this growth are the Motor­cy­cle Assem­bly Reg­u­la­tions which have since been adapt­ed across the East Africa Com­mu­ni­ty. These reg­u­la­tions paved the way for autho­rized local assem­blers to local­ly pro­cure 14 out of about 300 parts out of a motor­cy­cle. As a result, thou­sands of jobs have already been cre­at­ed. For Kenya to become a motor­cy­cle man­u­fac­tur­ing hub in Africa and for us to cre­ate the 250,000 new decent jobs as clear­ly illus­trat­ed by KAM the Gov­ern­ment needs to firm­ly sup­port the full imple­men­ta­tion of the Motor­cy­cle regulations.

Inci­den­tal­ly, Chi­na and India pro­tect local man­u­fac­ture by charg­ing 100% duty on import­ed motor­cy­cles. As such, the pro­tec­tion­ist approach through Reg­u­la­tions is in sync with glob­al practice.

The incom­ing Cab­i­net Sec­re­tary for indus­tri­al­iza­tion, Trade and Enter­prise Devel­op­ment must seize the moment. A crit­i­cal step for­ward is to imple­ment local pro­cure­ment pro­ce­dures for local­ly man­u­fac­tured vehi­cles and use of local­ly man­u­fac­tured parts. More specif­i­cal­ly, I sug­gest that the Pres­i­dent decrees that all Gov­ern­ments should buy local­ly assem­bled vehi­cles. That will make a pow­er­ful state­ment that Kenya is com­mit­ted to local auto­mo­tive man­u­fac­ture. Think green and act green.

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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