Local motorcycle parts creating new jobs
In 2020, the government through the National Treasury enacted a little noticed policy with gigantic impact. The Legal Notice 112 (Tax Procedures-Unassembled Motorcycles Regulations, 2020) turned on the ignition key for local manufacture of 7 out of 299 motorcycle parts.
In the last two months alone, 900 jobs have been created and an additional 1,600 jobs will be generated soon due to this motorcycle localisation policy.
According to the Kenya Association of Manufacturers (KAM) CEO Phyllis Wakiaga, three local manufactures are among those now manufacturing select motorcycle parts. Thanks to the policy, the three manufacturers invested at least Sh700 million and have already created nine hundred solid jobs. In addition, another seven companies have already started an investment process of Sh1.29 billion that will lead to an additional 1,600 jobs in the next four months.
They didn’t invest these billions because they had surplus cash. Rather, they did so through credit financing fueled by their strong belief in Kenya’s immense potential to create thousands of jobs through localisation. They anchored their strategy on the new regulations and borrowed knowing that they would eventually reap returns on their investments.
Buoyed by the example of these companies, at least eight others have committed to similarly manufacture motorcycle parts that include air filters; wiring harnesses; seats; metal components; batteries and helmets. Evidently, dozens of Kenyan companies are ready to produce motorcycle parts which will contribute to the Big Four agenda and a robust economy.
Localisation of the motorcycle industry can potentially lift our economy to great heights. As reported, there is a ready market for motorcycles because currently Kenyans troop to motorcycle dealers to buy about 25,000 motorcycles every month. In the wider East African region, approximately 850,000 motorcycles are bought annually. Before the localisation policy was enacted, this enormous market was largely benefiting foreign players to the detriment of our economy and local jobs.
Thanks to the localisation policy, the motorcycle industry will benefit the local economy in a bigger way. However, new policies always come with challenges because change can be painful. In this particular instance, some ill-advised merchants who are late to the local content party had sought a one-year extension of the Legal Notice 112 regulations.
In short, they want to continue importing foreign manufactured motorcycle parts that can gradually be produced locally. Doing so may be good for their business but it is wicked for the country as it robs Kenyans of reliable, decent jobs. The 2,500 Kenyans securing jobs due to the new regulations must continue to reap benefits of these newfound livelihoods. Thankfully, the government is midwifing this transition to localisation in a wise albeit firm manner that is sweet music to the ears of Foreign Direct Investments.
The government is supporting localisation through the intervention of the Presidency, National Treasury and Planning together with the Ministry of Industrialisation, Trade and Enterprise Development. These three have gone the extra mile to administratively ensure this policy shift remains beneficial to Kenyans without necessarily affecting motorcycle assemblers.
Such adherence to progressive policies creates investor confidence and contributes greatly to a conducive investment climate. This is the practical route great economies like India and China took to enhance performance of their economy.
As a result 100 per cent of their motorcycle parts are produced by Micro Small and Medium Enterprises (MSMEs) in their own countries and anyone willing to import a motorcycle from overseas is charged about 200 per cent government taxes and not 25 per cent as we do in Kenya.
Since the government is constitutionally mandated to remain beholden to the people of Kenya, understandably whatever it does must be in the best interest of those people and must be appreciated.
Imagine if you had to keep buying food from a restaurant instead of cooking it in your kitchen. That would greatly inconvenience you and eventually bankrupt you. Thankfully, Kenya is now beginning to produce its own motorcycle parts instead of importing them. We are now taking steps in the right direction and must keep walking irrespective of any hurdles that may be thrown our way by those resistant to change.
Motorcycle parts manufacture present the lowest hanging fruits to our livelihoods and vindicates the power of the motorcycle sector to revolutionise our economy. We must uphold Legal Notice 112 of 2020 for our posterity. Think green act green!
-The writer is founder Green Africa Foundation.