The government should move fast to implement incentives that will boost local assembly of motorcycles in the wake of increased demand for the two-wheeled vehicles.
Official statistics show that the value of motorcycle and tuk tuk (three-wheeler) imports rose by 28.7 percent to touch Sh10.3 billion in the nine months to September 2019.
These statistics demonstrate the rising demand for more efficient transport in jam-prone urban roads and rural areas with poor road networks and public transport infrastructure.
With the right incentives, nearly all the demand for motorcycles can be met by local assemblers who are currently operating at 50 percent capacity despite the high imports on which Kenya is spending colossal sums.
Building and assembling motorcycles locally will not only boost job creation, it will also enhance skills transfer and improve our trade position with other countries besides spurring industrialization and innovation.
Assemblers currently enjoy a lower import duty of 10 percent on the parts they ship in to build motorcycles.
Those importing fully-built units pay double or 20 percent, a move aimed to encouraging local assembly.
Industry players say they are working with the government to have the import duty reduced to zero in the medium term.
To win this concession, the players will have to source more parts from the local market. These include seats, pillion handle bars, side stands, batteries and chain cases, with the government saying it will lobby to have them excluded from the East African Community duty remission scheme.
The government’s offer is reasonable since greater local content will expand the supply chain and create even more jobs as well as high quality local products.
The motorcycle production business is a low hanging fruit whose success can build the foundation for achieving the greater ambition of expanding motor vehicle assembly which requires larger capital outlay.
New and established companies have already demonstrated their commitment to the industry, producing a wide array of brands that were previously imported fully built.
Motor cycle brands assembled locally include Yamaha, Bajaj, TVS, Honda, Hero, Haojin, Skygo, Captain, Tiger and Dayun. There are eight major players in the sector including Auto Industries, Car & General, Honda, Toyota and Abson Motors.
There are scores of others operating makeshift assembly operations. The current and planned incentives need to be part a comprehensive strategy to expand the industry.
Indeed, as the Draft National Automotive Policy established, the challenges keeping the sector from achieving its full potential have been compounded by the absence of a clear policy framework.