Automotive Sector Investment In Kenya: Kenya Delegates Panel Talk At 2021 IAA Mobility Munich
Germany’s biggest auto show, the IAA Mobility 2021, is being held in Munich this year from September 7th to 12th. Kenyan delegates are present at the auto show fishing for themes that will drive mobility in Kenya and the region.
Yesterday, Huber Rolf, Managing Director at Siemens Foundation, moderated Kenya’s panel: Moving Africa: Kenya’s Automotive Industry. The focus of the panel discussion was investments in the automotive sector in Kenya. In the panel was George Makateto from the Ministry of Industrialization, Trade and Enterprise Development, Dr. Isaac Kalua a.o Honda Motorcycles Kenya Limited, Kenya Water Tower Agency, and Benjul Virendra of BGM Holdings Limited.
IAA Mobility 2021, formerly the Frankfurt IAA (Internationale Automobil-Ausstellung), has been held bi-annually since 1952, and this year, the focus is on electrification and alternative transportation. The IAA Mobility 2021 focus is ‘what will move us next?’ and is looking for safe, emissions-free, and exciting solutions.
IAA Mobility 2021: Think Investment, Make It Kenya, the Land of Infinite Possibilities.
The discussion began with a short special video introduced by Benjul Virendra; Think Investment, Make It Kenya, the Land of Infinite Possibilities. It highlighted key reasons that make Kenya the go-to investment and business destination in Africa regarding mobility, with references from leading stakeholders in the country.
George Makateto made his presentation highlighting the economic pillars of the country to which investors can thrive: Oil & Gas, Tourism, Manufacturing, Trade, Blue Economy, Agriculture, Tourism, Financial Services, and Business Process Offshoring/IT Enabled Services.
“When it comes to manufacturing, as a government, we have picked four areas with presidential prioritization, we call it Big 4 Agenda, and if you look at that, we have manufacturing, food and nutrition, universal healthcare, and affordable housing,” Makateto said. He also discussed the enablers that included; Targeted Infrastructure Investments, Technology and Innovation, Governance, Cost of Energy, and Equipping youth with vocational skills.
Based on Mr. Makateto’s presentation, Kenya’s automotive structure is divided into four sections; Vehicle assemblers, Motorcycle Assemblers, Component Manufacturers for Automobiles, and Dealers and Franchise Owners. It further outlined the automotive value chain with a wide range of opportunities for investors in; Parts and Manufacturing, Engineering and Vehicle Product Development, Assembly, Vehicle Retail and Servicing, and Logistics and Supply Chain Business.
Mr. Makateto also outlined the investment incentives for EPZs (Export Processing Zones) and SEZs (Special Economic Zones). Some of the incentives from the government for investors include a 10-year corporate tax holiday, 25% corporate tax for another ten years, 30% from the 21st year, import duty, and VAT exemption on raw materials, machinery, and other inputs.
Kenya is A Gateway to More than 350 Million People, In East African, And Beyond.
While Introducing Dr. Isaac Kalua, Huber Rolf posed a question for the panel, “We saw the video and all the excitement about how beautiful Kenya is, at the investment climate. George showed us that there is a business dynamic going on and a supportive government. But what I also saw was there are a lot of Asian names, a lot of Chinese companies, Japanese companies, especially in the automotive industry, and I am wondering, we are sitting here in Munich at an International Automotive Exhibition, why are we not seeing more European or German investments there?”
“One of the things that, to answer your question, why people don’t know, is because they don’t realize, or they have not had the opportunity to interact with Kenya, to know the warmth that truly exists in that country.” Dr. Kalua answered, “Kenya has a very clear map in terms of what we want to achieve. Map of what the agenda of the nation is. And currently, we have the Big 4 Agenda,” he added.
Kenya has so much potential to be a gateway to the East African Community with more than 200 million people. It’s also a gateway for communities out of East African with a reach of 350 million people.
“The moment that people from Germany and Europe realize the location, and the security of investment. That you can repatriate what you can make as a profit, the existence of institutions like Kenya Association of manufacturers an umbrella institution that brings partners together and, therefore you have one-stop with the Kenya Investment Authority, and other related institutions,” he revealed.
Volkswagen South Africa recently made a comeback to Kenya after more than four decades since its last production in 1970. It joined other car brands, including Toyota, Isuzu, and Nissan, with an assembly plant in Thika.
“We are in the final stages of setting up the automotive policy that is going into parliament after a very vigorous process, with the ministry and the president,” Dr. Kalua disclosed.
The Future of Mobility, and Kenya’s Dynamic, Innovative Youth Towards Kenya’s Vision 2030
Huber Rolf also brought into perspective the issue of innovation, the future of mobility, and Kenya’s dynamic, innovative youth towards Kenya’s Vision 2030.
“If you look at the changes in mobility today, we are talking about moving towards hydrogen, or electric cars, you need that power of innovation, and Kenya has already proved that it can leapfrog into new technology and new areas which are known before,” he said.
Rolf also mentioned that there already are startups in Kenya working on E-mobility and new technology. In addition, the Kenyan and German governments are negotiating a framework on how they can collaborate on E-mobility.
He posed another question to the panel on the future of E-mobility in Kenya and what the country is looking to achieve in terms of motorcycles, cars, trucks, and renewable forms of mobility.
Mr. Makateto acknowledged Germany’s progress on renewable forms of mobility, as well as its plan to stop combustion engines by 2030. But, he stated, while Kenya has a similar vision, it’s not there yet. However, one of the items that will assist the country in moving entirely into E-mobility is policy and private sector engagement.
He also added that Kenya is already making reasonable steps towards E-mobility. For example, some startups are already testing out local ‘Matatus’ (Public Service Vehicles) and converting them from internal combustion systems to electric.
Mr. Makateto is right. Nairobi has thousands of startups and in all facets of the economy. But perhaps the most relevant to the discussion are sustainability innovations geared towards green energy and E-mobility. Some of the major players include Auto Truck East Africa, Solar E-Cycles, Opibus, Asobo, and Wetu.
Mr. Virendra also mentioned an important issue from the perspective of a private investor in Kenya for potential investors. He recommended coming in with a complete package. This involves bringing in a solution, assembling it locally, and offering support in terms of local training and partnerships.
Feature Image: @huber_rolf