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Revive auto industry to drive Kenya forward

Tuesday April 30 2019
njipic

A yard of second-hand vehicles in Mombasa on October 24, 2018. The automotive industry has been identified as a priority area with huge potential to revitalise manufacturing. PHOTO | FILE | NATION MEDIA GROUP

By BERNARD NJIRAINI

It’s the government’s primary responsibility to safeguard its interests through appropriate policy, legal and regulatory frameworks to achieve a conducive business environment favourable to its people.

To ensure stakeholders are well informed, the Constitution of Kenya 2010 provides for public participation before new policies are implemented.

The fundamental question in the minds of Kenyans is, to what extent should contentious issues disrupt well-intentioned policies?

In the recent past, Kenyans have witnessed ugly confrontations when introducing policies meant to regulate and achieve better performance in various sectors of the economy. Automotive industry is the latest to encounter strong resistance from actors.

The Kenya Automotive Bazaar Association has put up a spirited opposition to Automotive Policy meant to revitalise the industry, arguing that the policy will kill the multibillion-shilling second hand vehicles business.

MANUFACTURING

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Kenya’s aspiration to industrialise is anchored in Vision 2030. The Big Four Agenda, on the other hand, hopes to deliver part of the vision within the next four years, and manufacturing is a key priority.

The automotive industry has been identified as a priority area with huge potential to revitalise manufacturing, creating both direct and indirect employment in automotive assembly lines and across the entire value chain.

In 1990, Kenyans witnessed in a mixture of amusement, hope and surprise as the first ever car produced in secrecy drove around the athletics track of Kasarani Stadium amid cheers and joy, never to be seen again in public.

Thirty years down the line, countries that pursued their dreams are now competing for showroom spaces in Nairobi as they seek to get a slice of Kenya’s auto market.

The lesson learnt is that Kenya needs to reposition itself again, certainly through visionary policies.

GROWTH

At the onset of the World Bank and IMF Structural Adjustment Programmes (SAPs), which came with liberalised markets, the goods protection regime was overhauled, opening the floodgates for second-hand clothes, vehicles, and machinery, among others.

Influx of these vehicles and second-hand spares slowed the growth of the auto industry.

From an engineering point of view, machines, including cars, are designed to give optimum service up to a pre-determined period and operating outside the range is considered uneconomical.

Low initial capital requirements for second-hand vehicles creates a misconception that mitumba cars are cheap, ignoring issues to do with operational costs, safety and the environment.

CAR ASSEMBLING

These, combined with loss of employment, clearly informed the government’s change of plans to rationalise the sector.

With a GDP of $12,180 million in 1990s, Kenya was assembling about 13,000 vehicles. Projecting a similar growth to current GDP of $98.264 billion, Kenya would be producing 100,000 vehicles a year. Currently, about 6000 vehicles are assembled annually.

Sale of Fully Built Units has killed a promising industry, which would otherwise be employing thousands of jobless youth.

With appropriate policies, the country is looking forward to a promising future where investors are likely to set up automotive manufacturing plants here.

Mr Njinu is the managing director, Numerical Machining Complex. [email protected]

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