The Automotive Industry in Kenya
Kenya is an African country in East Africa and like all African countries it is making many attempts to manufacture and produce their cars among other things.
Kenya is currently attempting to completely build its cars. After building its first car in the late 80s popularly known as Nyay car after the then president. Kenya has a shot at the industry with Mobius Motors, which was founded in 2009. With KIBO Africa Limited, motorcycles have been rolling out from this local manufacturer.
Nyayo Car was a project by the Kenyan government to plan and manufacture Kenyan cars. The project was initiated in 1986. Five prototypes were made, named Pioneer Nyayo Cars and they attained a speed of 120 km/h. The Nyayo Motor Corporation was established to salvage the country from expensive imported cars and produce the cars in large numbers but due to unlimited funds, the project failed.
The Nyayo Motor Corporation was later renamed Numerical Machining Complex Limited, manufacturing metal parts for various local industries. The idea died like many other endless ideas that were thought of to be the salvation needed by the country.
Firms strong in local production have linked their rising fortunes to support from the government, which has enacted favorable policies that promote business health besides being one of the biggest buyers of new vehicles.
First, it's President Uhuru's era and this role is commendable in the industry. He has seen the growth and improvement of this industry in the country. “It’s important to acknowledge the significant role President Uhuru Kenyatta has played since 2013 in growing the auto sector through various policy initiatives,” said Wanjohi Kangangi, sales and marketing director at Isuzu East Africa.
“We are indeed grateful that the sector has enjoyed tremendous gains over the years through the robust support of the Ministry of Industrialization, Trade and Enterprise Development.”, Wanjohi.
The government 2019 banned imports of used trucks with load capacities of 3.5 tonnes and above besides all categories of used buses. Only second-hand minibuses were exempted from the ban. This is one of the many attempts by the Uhuru government to salvage what is of the industry.
The import restriction was introduced on the basis that local assemblers can churn out such vehicles, which are mostly used in commercial ventures such as public transport, construction, trade, and mining.
“We expect the benefits of this law to be felt immediately with the creation of up to 65,000 jobs in the local automotive industry through CKD [completely knocked down] assembly operations and local supply chains while contributing over Sh50 billion in taxes every year,” said Mr Kangangi.
The volume of imported cars and motorcycles has been on the increase due to the availability of attractive credit from financial institutions and the rise of the middle class. Kenya quickly scaling up economically especially in the eastern region of Africa meaning its population growing financially which in turn robust the demand for cars.
According to the Kenya National Bureau of Statistics (KNBS), the volume of imported vehicles between 2003 and 2012 has grown by over 300% from 33,000 units to 110,474 units. Passenger vehicles were Kenya’s fourth largest import overall in 2015, valued at approximately US$440 million and making up 2.4% of total imports (by value) while commercial vehicles ranked seventh, valued at US$380 million. If the current trend of 10% to 12% growth per annum on vehicle imports is to be maintained, Kenya will have five million vehicles on the road by the year 2030.
In the early 1980s, Kenya banned the importation of FBUs. At the time, Kenya was assembling approximately 18,000 units locally. Following a World Bank-imposed structural adjustment program in mid-1993, the country removed a large number of trade restrictions and the economy underwent liberalization, allowing the importation of FBUs. As no age limit was imposed on vehicles imported, second-hand imports, some up to 20 years old, flooded the market.
This new market trend meant the availability of affordable cars to a growing market that is also quickly becoming financially enlightened.
The industry has steadily been growing since then and the demand has never been high like the current age and its demand will steadily scale over the years.
Car access has become a basic necessity and not a luxury anymore. The middle class is still growing and a large population is dependent on white-collar jobs that demand commuting to the office daily, this alone makes a car a must-have.
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