Government has rolled out the Kenya National Automotive Policy to revitalise the automotive industry by promoting local assembly and manufacturing.

Trade Cabinet Secretary Lee Kinyanjui says the policy was deliberately tailored to gradually reduce over-reliance on imported used vehicles

The cabinet secretary expressed optimism that local automotive industry is headed for better times after the state introduced incentives and tax regulations that are favourable to stakeholders in the local market.

“Interventions such as the duty remission scheme that will now regulate importation of some automotive parts such as batteries, radiators and brake fluids will go a long way in boosting local industries,” he said.

According to the cabinet secretary, this will enhance the use of locally manufactured parts, hence promote the manufacturing sector in the country.

Kinyanjui pointed out that the newly approved Kenya National Automotive Policy was a significant step towards transforming the country’s automotive industry. By focusing on local manufacturing, promoting cleaner vehicles and fostering a thriving ecosystem, the cabinet secretary indicated that the policy aims to create a more sustainable and prosperous automotive sector.

He stated that the government was planning to raise a bond in Japan, which will be restructured so that at least Ksh13 billion from the total amount will be used to promote growth of the local automobile industry by making available affordable credit facilities to local players.

Kinyanjui noted that players in the automobile industry in Kenya who have the capacity to locally manufacture tyres, tubes, batteries, windscreens, oil filters, gaskets, bushes, suspension springs, seats, seat belts, oil seals, air cleaner element, shocks, spark plugs and mats among other accessories will be eligible for funding.

The cabinet secretary affirmed that to support establishment of a local robust automobile industry, the government was fostering a stable policy framework, endorsing business friendly tax regimes, enhancing security of businesses and investors and investing in infrastructure such as roads, water supply networks and reliable power supply systems.

Kinyanjui said government interventions in shoring up the automobile industry were targeted at reaping significant dividends in areas of employment creation, technology transfer and contribution to the gross domestic product.

“The economy is expected to greatly benefit from government incentives in the sector through direct injection of cash and creation of additional employment in local automobile assembling firms and suppliers of parts and accessories to the assembly plants,” Kinyanjui explained.

He pointed out that local assemblers are also enjoying import and excise duty exemption for the semi-knockdown kits to promote local assembling. The local automotive assembly has an installed capacity to assemble 46,000 units annually.

“We need to support the growth and development of local automobile assembly plants and spare part manufacturing entities. Local assembling will also create jobs and enable the transfer of skills,” Kinyanjui stated.

The cabinet secretary who spoke at the Kenya Industrial Training Institute (KITI) in Nakuru, noted that Kenya was rolling out thousands of graduates annually who would help shape the country’s industrial revolution and innovations.

TVETS, he noted, stand as the Launchpad for skilled makers, creators and problem solvers, the very engine that powers our manufacturing and industrial growth.

He urged artisans to use their skills to build industries, innovate boldly and write Kenya’s next success story adding that the future was industrial and dependent upon their creativity.

The cabinet secretary said that the automotive industry has been a pillar of industrialisation for many economies and a key driver of macroeconomic growth and technological advancement. Imported vehicles, including the second-hand ones, he noted attract between 25 per cent and 35 per cent duty.

Another upswing of this was creation of additional employment for local suppliers of parts and accessories to the assembly plants.

Current official data show that Kenya imports an average of 7,600 second-hand vehicles per month, with the average number of assembled units standing at about 430.

Kinyanjui stated that widespread use of second-hand spare parts in the country was mainly due to non-availability of new parts locally and rampant use of counterfeit and substandard spare parts. He indicated that the automotive industry has a long value chain creating both backward and forward linkages.

The backward linkages, he explained, include design and manufacture of vehicle bodies and other components, besides the fact that the automotive industry consumes steel, iron, aluminium, plastic, glass, carpeting, textiles, computer chips, rubber and much more.

Kinyanjui further observed that the industry creates forward linkages through vehicle dealers, garages, leasing firms, insurance firms and financial institutions, among others. He urged local assemblers of automotive to utilise locally assembled parts to spur growth in the sector and generate jobs.

Over reliance on imported spare parts, stated the cabinet secretary, had constantly diluted growth in the automotive sector, inhibiting the intended impact to the economy. He, however, said the future was bright after the national government approved the National Automotive Policy.

The policy is designed to support the growth and transformation of the automotive industry in Kenya into a significant contributor to the national GDP under manufacturing.

“Kenya’s automotive sector is experiencing a significant transformation as technology, environmental priorities and economic development intersect. To monitor, moderate and boost this transformation, the national automotive policy was proposed and approved to promote automotive manufacturing in Kenya,” Kinyanjui explained.

The policy also aims to drive employment generation and skills development. Statistics from other countries show that local assemblies create more formal jobs on average compared to vehicle import trades, thereby increasing employment opportunities ten-fold across the industry value chains.

“With the Automotive Policy, the automobile industry has a potential to create over 200,000 jobs in Kenya directly or indirectly if the right investment environment is put in place.

When we add manufacture of spare parts to local assembly vehicles, we create formal, quality and meaningful jobs where employees can afford to pay taxes and technology transfer,” noted Mr Kinyanjui.

The Kenya National Automotive Policy aims to revitalize the automotive industry by promoting local assembly and manufacturing, gradually reducing reliance on imported used vehicles.

This includes a shift towards Complete Knocked Down (CKD) assembly with the goal of creating jobs and fostering economic growth. The policy also addresses environmental concerns, setting standards for emissions, promoting green initiatives and enhances the adoption of environmentally friendly practices.

The policy further aims to support the development of infrastructure needed for the automotive industry, including parts manufacturing.

“Kenya is an advanced economy that can draw a niche in this sector given the level of technology advancement and years of experience in the sector.

As of now, Kenya is only involved in automotive assembly on behalf of Original Equipment Manufacturers (OEMs) such as Toyota, Volkswagen and Nissan.

• A Tell Media / KNA report / By Jane Ngugi and Dennis Rasto