Plans to set up regional vehicle assembly plant in top gear

Plans to set up a regional vehicle assembly plant are well underway, the East African Community (EAC) Secretariat has confirmed.

The Secretariat, an intergovernmental organisation of the Republics of Kenya, Uganda and the United Republic of Tanzania, was tasked by a March 2016 Summit of regional leaders to speed up work on a comprehensive study on the bloc’s automotive industry.

The development is set to create more jobs and reduce pollution from imported used vehicles.

The 17th Ordinary EAC leaders’ Summit held in Arusha, Tanzania, earlier this year, directed the EAC Council to expedite the process and report to the 18th Summit. At the time, President Uhuru Kenyatta met with other leaders from the EAC in Arusha to address progress on initiatives tabled by the Community.

According to US-based international research company, Frost & Sullivan, the EAC’s motor industry is largely comprised of imported cars, with no significant manufacturing activities. The average Cost, Insurance and Freight (CIF) of imported motor vehicles in the region in the last three years was about $2 billion (Sh202 billion).

Frost & Sullivan data indicates that the value comprised of about $900 million (Sh91 billion) for Kenya, $493 million (Sh50 billion) for Uganda, $537 million (Sh54 billion) for Tanzania and about $80 million (Sh8 billion) for both Rwanda and Burundi.

“Today, Kenya, the region’s leader in motor vehicle assembly boasts a fairly well developed industry – with three assembly plants: Kenya Vehicle Manufactures (KVM), in Thika, Association Vehicle Assemblers (AVA), in Mombasa, and General Motors East Africa Limited (GMEA), in Nairobi,” said the report. The three plants focus on assembly of pick-ups and heavy commercial vehicles.

The vehicle assembly plant plan, which is still in its first phase, seeks to scale down on the bloc’s import bill, especially spent on the importation of second-hand vehicles. If successful, the strategy will also create employment for residents in the community as well as generate revenue through motor vehicle and spare parts exports. EAC Head of Communication and Corporate Affairs, Mr Othieno Owora noted that that the 17th Ordinary EAC summit will consider council report on modalities for the promotion of motor vehicle assembly in the region.

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