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Ideas & Debate

LANGAT: Sobriety needed in used car imports age debate

Imported cars at the port of Mombasa. FILE
Imported cars at the port of Mombasa. FILE PHOTO | NMG 

The current discussions between the Kenya Bureau of Standards (Kebs) and motor vehicle industry players on the contentious issue of age limit on imported second-hand vehicles is healthy, but should be handled with sobriety.

The business of used vehicles is a lucrative venture worldwide worth about $70 billion. In Africa, close to 45 million vehicles are in use, majority imported as used vehicles.

According to UN Environment Africa Used Vehicle report of 2018, the continent imports four times more automotive products than it exports. For example, in 2014, automotive imports were valued $48 billion compared to exports of $11 billion.

Ethiopia and Nigeria used vehicle imports accounted for 80 percent of all vehicle sales while during the same period more than 96 percent of vehicles imported into Kenya were used vehicles.

Largely, the current push to have reduction of age limit for imported used vehicles is informed by their negative impact on environment and human health.

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Several studies have it that more than 1.5 billion urbanites around the world breathe air that exceeds the World Health Organisation standards causing over a million deaths each year due to air pollution while more than 70 percent of deaths from outdoor air pollution occur in the developing world.

In addition, health costs of urban air pollution are estimated to approach $1 billion per year and the health effects cost anything between 5 percent to 20 percent of gross domestic product. Road transport is responsible for 20 percent - 25 percent of all carbon dioxide and other Green House Gases (GHG) emissions globally.

East Africa reports close to 10,000 road fatalities annually with an average fatality cost of about $12,000 in addition to cost per injury of about $3,000. Although most of the accidents may be attributed to human error, the big question is whether we are prepared in terms of capacity and infrastructure to handle the pressure of influx of vehicles.

On the other hand, imported used motor vehicle industry affords low-to-middle-income consumers the opportunity to purchase affordable vehicles since the cost of a new car is about four times higher than the average of imported used one and therefore prohibitive to these groups.

Any controls including using a prescribed age or an emission standard would effectively impose restrictions on the maximum age of vehicles entering the region, resulting in the potential for a higher average price of imported vehicles, reduced numbers of cars entering a country, increased value of those already in the market and longer lives for existing vehicles to offset reductions in number of those entering.

By limiting the age of imported used vehicles, the communities at greatest risk are the small and medium sized enterprises who have invested in this sector.

However, this must also be balanced with negative impacts of influx of used motor vehicles which include traffic congestion leading to a substantial loss of productivity in the economy, high fuel consumption, low air quality and safety issues. The age of a vehicle has a direct impact on its availability, productivity and total operating costs.

It is because of the above reasons that different countries in Africa have adopted different mechanisms to control the importation of used vehicles.

For example, Egypt, South Africa, Sudan and Morocco impose a total ban on used vehicle imports while Algeria, Tunisia, Libya, Mozambique and Kenya are implementing between a six-to-nine-year rule. More than 24 countries are either implementing 10-year rule or have no regulations at all in place.

Discussions on the harmonisation of age limit for the importation of used vehicles in the East Africa Community have been ongoing for the last decade and an agreement is yet to be reached.

It is evident that imposing an age limit for importation of used vehicles is inevitable, however, the discussion is a delicate balance between socioeconomic, technology transfer, health, safety and to some extent political considerations.

The rule of the thumb is a cost-benefit analysis between the negative and economic impact on health, safety and environmental, and socioeconomic benefits.

A more realistic way of approaching this discussion is to focus on opportunities that will be created. Since age limit will reduce the number of imported used vehicles, public motor transport will be an alternative to meet logistics demand. This will create business opportunities in areas such as Bus Rapid Transit (BRT) and Light Rail Transit (LRT).

The age limit is also likely to trigger significant investments in the manufacturing and/or assembly of affordable vehicles. The automotive industry will be involved in design, development, manufacture, marketing, sale and maintenance of motor vehicles.

The industry requires raw materials and auto parts from various industries. This will spur economic activities such as recycling, dealership, finance and credit, logistics, advertising, repair and maintenance, petrol stations and insurance.

In addition, mandatory regular inspection and maintenance of all motor vehicles will create other businesses.

Kipkirui Langat, CEO, Technical and Vocational Education and Training Authority. [email protected]

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