Nakuru: The local automotive industry is headed for a boom after the government announced plans to unveil a Sh13 billion affordable credit financing kitty for players in the sector.
According to Kenya News Agency, the State has introduced incentives and tax regulations such as the duty remission scheme to regulate the importation of some automotive parts like batteries, radiators, and brake fluids, among others.
Cabinet Secretary for Investments, Trade and Industry Mr. Lee Kinyanjui stated that the decision by the government was aimed at enhancing the use of locally manufactured parts, thereby promoting the manufacturing sector in the country. The newly approved Kenya's National Automotive Policy is expected to transform the country's automotive industry significantly.
The government plans to raise a bond in Japan, restructuring it so that at least Sh13 billion from the total amount will be allocated for the growth of the local automobile industry by providing affordable credit facilities to local players. Kinyanjui mentioned that those with the capacity to manufacture various automotive accessories locally would be eligible for funding.
In a bid to establish a robust local automobile industry, the government is fostering a stable policy framework, endorsing business-friendly tax regimes, enhancing the security of businesses and investors, and investing in infrastructure. These efforts are aimed at supporting long-term industrialization and are expected to yield significant dividends in employment creation, technology transfer, and contributions to the gross domestic product.
The economy is anticipated to benefit from the government incentives through direct cash injections and the creation of additional employment opportunities for local automobile assembly firms. Kinyanjui, the chief guest at the Nakuru County Investment Roundtable Forum, emphasized the importance of local assembly and manufacturing to reduce reliance on imported vehicles, which attract a duty of between 25% and 35%.
Kenya imports an average of 7,600 second-hand vehicles monthly, and the widespread use of second-hand spare parts is mainly due to the lack of new parts locally and the prevalence of counterfeit products. The automotive industry is recognized as a driver of macroeconomic growth and technological advancement, creating both backward and forward linkages in the economy.
Kinyanjui pointed out that the newly approved National Automotive Policy aims to drive employment generation and skills development within the industry. It has the potential to create over 200,000 jobs in Kenya directly or indirectly if the right investment environment is established.
The automotive industry in Kenya is poised for significant transformation as the country moves towards local assembly and manufacturing, gradually reducing reliance on imported used vehicles. The Kenya National Automotive Policy is designed to promote this shift, foster economic growth, enhance the adoption of environmentally friendly practices, and support the development of necessary infrastructure.
Kenya's involvement with Original Equipment Manufacturers (OEMs) like Toyota, Volkswagen, and Nissan is notable, and partnerships with franchise holders such as Isuzu East Africa Ltd and Kenya Vehicle Manufacturers are expected to boost the local assembly of automobiles. The African Continental Free Trade Area (AfCFTA) agreement further presents opportunities for increased market access and trade.
Energy costs remain a critical factor influencing competitiveness, and efforts to expand geothermal, hydro, and solar energy capacity are emphasized. Stakeholders also highlight the need for a competitive business environment, skill development initiatives, and stable policy frameworks to foster long-term industrialization and growth.
These concerted efforts aim to transform Kenya into a robust manufacturing economy, leveraging the automotive sector for economic development and employment generation.