EAC/JICA Automotive Industry Experts Meeting winds up in Nairobi
A three-day meeting attended by a broad spectrum of stakeholders and experts from the Automotive Industry, Finance, Customs and Trade sectors as well as vehicle manufacturing company representatives from the East African Community Partner States has come to a close at the Sarova Panafric Hotel in Nairobi, Kenya.
The main objective of the meeting organized by the EAC and the Japan International Cooperation Agency (JICA), was to review and validate the progress report of the Comprehensive Study on Automotive Industry and provide inputs towards finalization of the same and also inform the EAC and potential private sector investors (both foreign and domestic) on policy options and modalities to promote and develop the motor vehicle industry in the region.
The EAC Industrialization Policy and Strategy (2012-2032) aims at ‘transforming the manufacturing sector in EAC through higher value addition and product diversification based on comparative and competitive advantages of the region’ and is currently under implementation.
The 16th Ordinary Summit of the East African Community Heads of State of 20th February, 2015 “directed the EAC Council of Ministers to study the modalities for promotion of motor vehicle assembly in the region, and to reduce the importation of used motor vehicles from outside the community, and to report progress to the 17th Summit.”
The Summit at their 17th Ordinary Meeting held on 2nd March, 2016 took note of the progress and roadmap towards finalization of the Comprehensive Study on the Automotive Industry in the region and directed the Council to expedite the process and to the 18th Summit.
In implementing the Summit directives, the EAC Secretariat partnered with JICA, which commissioned a consultancy study to be finalized in April 2017. The draft progress report on automotive industry in the EAC outlining the status of automotive industry in the region, and the initial policy issues emerging from the benchmarking missions was prepared. The team embarked on consultative missions to EAC Partner States to compile baseline information on the status of the automotive industry, and to Vietnam and Japan for a benchmarking exercise from 20th September to 7th October, 2016.
Japanese academicians shared their global best practices of promoting the automotive industry in the EAC region while the Partner States made presentations on the status and challenges facing the automotive industry in their countries.
It was observed that the motorcycle sector is growing rapidly in the EAC region. With the rise in number, the sales price drops due to economies of scale. Further, along with the increase of production volumes, local production is gradually initiated for parts and materials that meet the effective minimum production scale. In addition to the complete build-up unit sales itself, demands are increased for repair services and their associated areas (forward linkage effect). This sector therefore offers opportunity for rapid development and needs to be initial entry point for rapid development of the automotive industry.
The study missions to Vietnam and Japan revealed that the usage of local content was one of the drivers for the growth of the automotive sector. This is an area that EAC needs to explore further and adopt appropriate measures which will consequently spur the development of the sector.
The experts also noted, among other things, the need for policy coherence within different sectors for the progress of the automobile sector. It was also observed that for the automotive industry to grow there is need for volumes that can lead to economies of scale and therefore, a regional approach to develop the sector and leverage on the EAC, COMESA and SADC Tripartite Free Trade Area.
Having considered the mission study report and a summary of issues and observations deliberated, the meeting was declared officially closed by the Chairperson; Eng. Elli Pallangyo, Assistant Director, Ministry of Industry, Trade and Investment from the United Republic of Tanzania.