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Munya in trouble with MPs over controversial used cars policy

Tuesday May 7 2019

Lawmakers demand proper consultations after CS Munya admits this did not take place.

Trade CS Peter Munya before the National Assembly Committee on Trade, Industry and Cooperatives Committee on May 7, 2019, where he responded to questions on the status of the used cars policy. PHOTO JEFF ANGOTE | NATION MEDIA GROUP 

IN SUMMARY

  • The National Automotive Policy seeks to lower the age limit of imported used cars, with engine capacities higher than 1500cc from eight years to five years by July 2019, three years by July 2021 and zero years by July 2023.
  • In April, a meeting called by the Industry, Trade and Cooperatives ministry to validate the draft policy turned chaotic after industry players demanded that their views be incorporated first. 
  • MPs slammed the brakes on the policy on Tuesday, after Trade Cabinet Secretary Peter Munya admitted that industry players had not been consulted.

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The proposal by the government to reduce the age of imported used cars from eight to five years this year, as contained in the draft National Automotive Policy, hit headwinds on Tuesday after MPs called for proper consultations. 

The policy seeks to lower the age limit of imported used cars, with engine capacities higher than 1500cc, from eight years to five years by July 2019, three years by July 2021 and zero years by July 2023.

In April, a meeting called by the Industry, Trade and Cooperatives ministry to validate the policy turned chaotic after industry players demanded that their views be incorporated first. 

The opposition was by members of the Kenya Auto Bazaar Association (Kaba) and the Car Importers Association of Kenya (CIAK), who claimed the government proposal was tailor-made to cushion Asian, European and American multinationals from huge taxes.

NO CONSULTATIONS

MPs slammed the brakes on the policy on Tuesday, after Trade Cabinet Secretary Peter Munya admitted that industry players had not been consulted.

Mr Munya, who later told members of the Trade, Industry and Cooperatives committee that the government was prepared to delay the policy implementation by a year, had a rough time giving the status report as they insisted on inclusive consultations.

His attempts to convince the committee members on the policy hit a brick wall as they told him off, led by their chairman Kanini Kega (Kieni).

The minister explained that "some of the major negative impacts of economic liberalisation on the motor vehicle industry include flooding of the local market with imported used cars, loss of job opportunities and foreign exchange and overall stunting of economic growth".

But committee members would hear none of this.

Mr Kega said, "We speak on behalf of the people who want to buy a new car but cannot because of the cost implication. The duty paid is just too huge and please. Just tell us this was one of those many roadside declarations."

He added, "I personally drive a second hand car because a new one is so expensive and you never consulted us on this draft policy.”

JOB CREATION

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Mr Munya also ran into problems with the MPs when he said the policy would help with expansion of the three local car assembly plants and create jobs, just as is the case in South Africa - the largest in Africa - and India, which is growing.

He also said the government was committed to ensuring cars assembled locally retailed at similar prices as those produced in Japan.

But Aldai MP Cornelly Serem faulted the CS, saying the assembling industries that exist do not perform this role.

“Tell us how many jobs have been created from the three assembly plants and the number of ordinary Kenyans who are able to buy a new car,” Mr Serem said and also sought to know the directorship of the companies.

It was at this point that Mr Munya said the proposal was a work in progress.

“It remains a draft until it is given the authenticity it requires by MPs. It is going through a motion. We could give it up to a year for people to prepare, meaning the status quo remains,” he said.

'DOOM'

Kaba chairperson Major (Rtd) John Kipchumba and his CIAK colleague Peter Otieno have previously vowed not to allow validation of draft policy.

They say it is “outright” discriminatory and "bad news" for the country as more than 2.5 million Kenyans, employed directly or indirectly in the industry, risk losing their jobs.

“This clearly spells doom for more than 85 per cent of Kenyans, whose only hope of ever owning a car entirely depends on importation of used cars. The government should give us a chance to choose the cars we want to buy, own and drive,” Mr Kipchumba said.

Major (Rtd) Kipchumba said Kenya has no automotive manufacturing industry and that what the government is proposing is akin to favouring multinationals operating in the country at the expense of Kenyans.

According to the chairperson, what Kenya has are new motor vehicle franchise holders who are importing Fully Built Units (FBU’s), and assemblers mainly importing Semi Knocked Down (SKD’s) units.

The units include bolts and nuts, which they ship in from abroad and assemble with minimum workforce and without any local content.

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