Car dealers are stuck with piling stocks of vehicles because the registration of new units has remained frozen for more than two weeks in an ongoing audit of the National Transport and Safety Authority (NTSA) system.
The audit is intended to weed out fake number plates.
The Business Daily has learnt that multiple government agencies are involved in the ongoing clean-up that comes in the wake of last month’s terrorist attack on Nairobi’s dusitD2 hotel complex where a car used by the gunmen had the same registration number (KCN 340E) as another vehicle.
NTSA has an automated system for vehicle registration and transfer of ownership.
The disruption of its services has affected all players in the motor vehicle business, including customers, dealers and banks.
Other services affected by the outage include issuance of driving licences and renewal of road service licences.
“It has an impact on the backlog it creates and increases cost of doing business,” said Mr Dinesh Kotecha, the chief executive of Simba Corporation, which sells Mitsubishi trucks and Renault cars, among others.
“Reduced sales initially have an impact on cash flows and financing cost and therefore profitability.”
Kenya registers about 8,000 vehicles per month, underlining the scale of the crisis.
It is estimated that more than 4,000 vehicles are stuck at the Port of Mombasa awaiting number plates.
Their owners are incurring significant daily storage charges ranging from Sh3,000 to Sh10,000 depending on the type of vehicle, with the total standing at more than Sh16 million.
Motor vehicle dealers and companies in transport, trade, manufacturing and construction industries are among those counting losses from the service disruption.
Sources familiar with the ongoing audit say the freeze in registrations could persist for another week.
NTSA director-general Francis Meja did not respond to our request for comment on the matter.
Another source said that the vehicle registration clean-up was intended to last a few days, but the prolonged suspension of services was an indicator that the problem of multiple illegal registrations could be extensive.
Scores of vehicles have been found to share the same number, with instances of a genuine registration altered to match the details of another car. This indicates that the NTSA system has been compromised.
The agency’s insiders are suspected of working in concert with criminals to enable the illegal registrations, which aid in concealing the identity of offenders such as robbers and terrorists.
The Anti-Terror Police Unit (ATPU) last month raided NTSA’s offices and arrested scores of the agency’s employees, including senior managers working in the licensing, information technology, inspection and the registration of motor vehicles departments, as investigations into the racket intensified.
The fake number plates saga has also been linked to tax-evasion schemes where vehicles are declared to be in transit to neighbouring markets such as Uganda and South Sudan but end up being sold in Kenya.
Sources say the cars with Uganda or South Sudan registration are eventually given local number plates as part of the abuse of the NTSA system, effectively denying the government revenue. The fake physical number plates are made in Nairobi and other major towns.
Cases of multiple illegal registrations that have come to light demonstrate that the criminals usually attach fake number plates to cars that closely match the genuinely-registered vehicles.
Two cars sharing the same registration details, for instance, would normally be of the same make, model, colour and body type.
While the crackdown on the racket continues, motorists and businesses are counting losses from the suspension of services at NTSA.
This is the latest business setback suffered by customers and players in the motor vehicle assembly, importation and their partners including banks.
It adds to the frequent shortage of number plates that disrupts clearance of vehicles at Mombasa’s container freight stations and results in significant storage charges.