Kenya Association of Manufacturers (KAM) has partnered with the African Association of Automotive Manufacturers (AAAM) to drive growth in Kenya's automobile-making industry.
This will be achieved by scaling up production, increasing trade, and driving the global competitiveness of Kenya’s automotive sector, the two entities said on Thursday.
It comes at a time the government is keen to support car makers and assemblers in the country, in a job creation drive and taming the high used-car imports.
National Treasury has in 2022-23 budget given tax incentives targeted at the sector, which according to CS Ukur Yatani, it has gained traction.
In order to encourage more investment, especially in the manufacture of passenger motor vehicles locally, he proposed to exempt from VAT inputs and raw materials used in the manufacture of passenger motor vehicles.
Additionally, he proposed to exempt locally manufactured passenger motor vehicles from VAT.
Currently, locally assembled motor vehicles are exempt from excise duty.
“This is aimed at encouraging investment in this sector and enhancing competitiveness of locally manufactured passenger motor vehicles,” Yatani said.
Speaking during the MoU signing ceremony, AAAM chief executive Dave Coffey predicted that with a progressive policy, Kenya’s automotive industry is set to increase its market share locally and regionally.
“The increased focus on building value chains and enhancing trade shall spur the demand for automotive industry products,"Coffey said.
An enabling business environment attracts investors, he said, citing countries such as Morocco and South Africa, which have thriving automotive industries.
He said through the partnership, the associations will collaborate to enhance scale, spur industrialisation and deepen localisation of goods manufactured by Kenya’s automotive industry.
KAM Chief Operating Officer Tobias Alando expressed the association’s optimism that the partnership shall give impetus to the automotive industry in the country.
Kenya’s automotive industry is the most established in the region.
"However, it continues to face challenges, such as shortage of skilled labour force, low levels of research and development and lack of long-term financial solutions for the sector to enable investments in technology," Alando said.
He said by collaborating with AAAM, the associations will continue to develope automotive policies geared towards positioning Kenya as a production and trade hub, integrating EAC into the value chain and providing market linkages for sector players.
The MoU was signed during AAAM’s visit to Kenya, aimed at enabling participants to understand Kenya’s automotive industry and providing linkages with investors.
Meanwhile, the number of new cars sold in Kenya in the year to August fell 38.6 per cent, industry data shows, recording the lowest eight-month sales in the last 15 years.
A total of 8,752 units were sold between January and August when the country held its general elections, Kenya Motor Industry Association (KMIA) indicates in its latest numbers.
This is down when compared to 14,250 units sold in the same period last year, comprising of both completely built unit and knocked downs.
