Africa > East Africa > Djibouti > Djibouti City > A motor vehicle assembly plant. East African states are tightening controls on used car imports in a drive to cut pollution and boost the local manufacturing industry.

Djibouti City: A motor vehicle assembly plant. East African states are tightening controls on used car imports in a drive to cut pollution and boost the local manufacturing industry.

2016/06/13

East African states are tightening controls on used car imports in a drive to cut pollution and boost the local manufacturing industry.

Kenya recently announced that it would scale up its used car emissions laws, joining Uganda which has by presently introduced related taxes.

Cabinet Secretary in Kenya’s Ministry of Transport James Macharia said that the policy would any minute at this time be in place and that motorists found to be in breach of the law risk having their cars deregistered.

“By the end of the year, we will require vehicles countrywide to undergo a mandatory inspection to determine their level of toxic emissions,” said Mr Macharia.

The move comes against the backdrop of the East African Community 17th Heads of National Summit in March, which tasked the Secretariat to speed up work on a comprehensive study on the potential of setting up a regional car-making industry.

However, in its 2016/17 budget unveiled on June 8, Kenya scrapped a flat rate business of Ksh200,000 ($1,982) on cars aged additional than three years — which form the bulk of the used-car market — and Ksh150,000 ($1,486) for those aged below three years, and reverted to a 20 % levy on the price of the car that was in place before December last year.

Cabinet Secretary for the National Treasury Henry Rotich said that the flat rate was unfair, inequitable and punitive to importers of vehicles commonly bought by low-gain earners, but beneficial to importers of luxury vehicles.

Environmental levy

On its part, Uganda introduced an environmental levy of up to 50 % of Customs business on the price of cars aged 10 years or additional in the completed financial year.

The move was meant to discourage the importation of cars that have higher pollution levels. Cars aged between five and 10 years attract a 35 % levy.

It is expected that the EAC Secretariat will, at the 18th Heads of National Summit, share a strategy policy paper borrowed from African car makers like South Africa, Nigeria and Ethiopia, with a view to adopting it in the region.

An EAC official privy to the deliberations by the Secretariat committee said that so far, the study is looking at ways to phase out secondhand vehicles — popularly known as Dangerous Mechanical Conditions.

South Africa for example, has used tax incentives to promote its fledgling auto industry while Ethiopia has a policy that requires the government to use only locally-assembled cars as a way to boost sales,” the official said, adding that end user cost reductions will as well be a key element in the policy proposition to be presented at the summit.

The South African auto industry has relied on tax incentives and protectionism for years, becoming the continent’s major car assembly hub.

In Summary

East African states are tightening controls on used car imports in a drive to cut pollution and boost the local manufacturing industry.
Kenya recently announced that it would scale up its used car emissions laws, joining Uganda which has already introduced related taxes.
On its part, Uganda introduced an environmental levy of up to 50 per cent of Customs duty on the value of cars aged 10 years or more in the past financial year.
It is expected that the EAC Secretariat will, at the 18th Heads of State Summit, share a strategy policy paper borrowed from African car makers like South Africa, Nigeria and Ethiopia, with a view to adopting it in the region.

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