This archive report was first published on 19 October 2019.
On Friday, President Uhuru Kenyatta launched Toyota Kenya's new assembly plant at the Associated Vehicle Assemblers in Miritini, Mombasa County. The President emphasized the importance of supporting local industries, particularly in the automotive sector.
He noted that the public sector has been instructed to prioritize locally assembled vehicles in their procurement decisions. However, he expressed concern that some players in the automotive sector are actively campaigning against this initiative.
"The public sector has clear instructions to prioritize locally assembled vehicles in their procurement decisions. However, I have noted with concern that some of the players in the automotive sector are actively campaigning against this initiative by the government to support investment in local assembly of vehicles," he said.
President Kenyatta urged private sector actors to prioritize the interests of the country and align their business models with Kenya's development aspirations. He emphasized the need for the private sector to invest in full automotive manufacturing, including joint ventures, training, and building the capacity of local Small and Medium-sized Enterprises (SMEs).
He challenged Toyota to scale up its investments in Kenya from assembling vehicles and the eventual establishment of a fully integrated vehicle manufacturing plant.
The President further announced that the government is working on a national automotive policy to support local vehicle manufacturers. He instructed Trade, Industry and Cooperatives Cabinet Secretary Peter Munya to present the policy to the Cabinet for approval within three weeks.
"The overall objective of the policy is to provide our domestic industry with opportunities to achieve competitiveness in manufacturing of vehicles and parts," the President said.
The policy will lay down the legal and institutional framework necessary to guarantee regulatory certainty for investors. It will also define the desired knockdown kit levels for vehicle and motorcycle assembly, articulate the fiscal incentives and other measures needed to stimulate local content development, and outline the role of Technical and Vocational Education and Training (TVET) in the development of the automotive industry.
President Kenyatta highlighted that Kenya is positioning itself to take advantage of the huge market created by the adoption of the African Continental Free Trade Area (AfCFTA), which holds an enormous market potential of 1.27 billion people.
Toyota has invested Shs1 billion in the new assembly line designed to assemble the new Hilux 4x4 pick-up trucks. Kenya's motor vehicle assembly industry registered an annual turnover of $600 million (including regional dealerships) in 2018, employing more than 12,000 people.
Other international companies, such as Volkswagen and Peugeot, have also opened new production lines in Kenya in the last two years, while General Motors substantially increased its investment in the local assembly of heavy commercial vehicles.
