Kenya’s planned tax-free entry of more than 100,000 electric vehicles should come with measures to expand local production, create jobs and attract more investment into the automotive industry, the Kenya Association of Manufacturers (KAM) has said.
The manufacturers’ body said the electric mobility transition presents an opportunity for Kenya to build its industrial base, but warned that the benefits could be limited if the country relies mainly on fully assembled vehicles brought in from abroad.
More than $400 million, about Sh51.6 billion, has already gone into Kenya’s electric mobility sector, covering vehicle assembly, battery technology, charging facilities and other related businesses, according to KAM.
“The real measure of this transition will not be how many electric vehicles arrive at our ports, but how many leave our factories,” KAM chief executive Tobias Alando said.
Alando said the rising demand for electric motorcycles, buses, three-wheelers and passenger vehicles should be used to expand manufacturing activities in the country.
He said Kenya should avoid becoming mainly a destination for imported fully built electric vehicles when the growing market could instead support local assembly and production.
The government announced the proposed duty-free incentive in May this year, a move that could allow more than 100,000 electric vehicles into the Kenyan market without duty.
KAM said the measure could provide a major market for manufacturers if it is designed to encourage companies to assemble vehicles locally.
The association wants the policy to focus on vehicle categories where Kenya already has production capacity, allowing manufacturers to put more money into local factories and related activities.
“Where local assembly is possible, the policy framework should encourage manufacturers to invest and produce in Kenya,” Alando said.
KAM’s preliminary assessment shows that the economic benefits would differ sharply depending on whether the vehicles are assembled in Kenya or imported as complete units.
The association estimates that local assembly of 100,000 vehicles could support about 6,300 jobs during the early stages of production. Employment could then increase to about 12,500 jobs as production expands, while around $94.6 million, equivalent to Sh12.2 billion, could remain in the local economy each year.
The same number of fully built vehicles imported into the country would support about 400 jobs and retain approximately $53.5 million, or Sh6.9 billion, in local value.
KAM said the difference highlights the impact that decisions around electric vehicle policy could have on Kenya’s wider manufacturing ambitions.
Alando said companies considering investments in automotive manufacturing need stable and predictable policies because such projects require substantial capital and take years before investors recover their money.
The investments cover areas such as factories, tooling, machinery, development of local suppliers and training of workers.
KAM is therefore seeking clearer rules for the automotive sector to give manufacturers greater certainty as they plan investments linked to electric mobility.
The association also pointed to existing financing programmes that could help increase investment in production capacity, technology and skills.
Among them is the Kenya-Japan Samurai Bond, valued at Sh22.1 billion, with Sh13.1 billion directed to the automotive and spare-parts sectors.
KAM said such funding could help manufacturers increase their capacity and adopt the technology and skills needed to support the growth of electric mobility in Kenya.