Africa Automotive News September-October digital issue 2019

News
EAC locks out duty-free car imports from South Africa
at the Comesa Secretariat.
Currently, finished goods imported
into the EAC attract a duty of 25%,
intermediate goods (10%) and raw
materials (0%) under the EAC’s existing
three-band tariff structure which came
into effect on January 1, 2005.
Moreover, there is a list of sensitive
products such as milk, sugar, wheat, rice
and garments which attract higher duty
of above 25% to protect such industries
from competition.
Players in the automobile sectors from
the East African Community and the
Southern African Customs Union are
developing a joint policy to encourage
motor vehicle manufacturing that is
beneficial to both blocs.
This development comes at a time when
the tripartite free trade area (TFTA) tariff
negotiations launched more than four
years ago are near conclusion. The two
economic blocs have had a prolonged
battle over whether to abolish the
contentious 25% import duty under the
tripartite free trade area (TFTA).
The two blocs have agreed that import
duty on some motor vehicle parts will be
abolished within the first five years of the
TFTA, and others will enter duty free as
provided under the EAC CET.
The move ostensibly curbs a massive
influx of motor vehicles from South Africa
into the EAC region once the more than
700 million-people TFTA comes into
force. It is estimated that the number of
vehicles imported into East Africa each
year has grown to over 250,000 and is
expected to reach 500,000 by 2030.
Car Industry
As a result, member states — Rwanda,
Burundi, Uganda,
Kenya, Tanzania,
and South Sudan
— are pushing
for the growth of
the automotive
assembling industry
in the region.
“Automobile
industry players
in the two regions
are involved in
development of
the strategy,” said
Benedict Musengele,
acting director
general in-charge of
customs and trade
Last year, the EAC heads of state directed
the Council of Ministers to explore the
possibility of developing the automotive
industry by reducing importation of
used vehicles from outside the region
and thereby make the region more
competitive.
These countries are also tightening rules
on the importation of second-hand
cars into the region as part of efforts to
encourage local assembly.
For instance, in 2017 the EAC Council of
Ministers recommended to the 18th EAC
Heads of State Summit that the age limit
for used imported vehicles be lowered to
five years by 2021.
Kenya currently allows the imports of
used cars with of up to eight years,
15 years in Uganda, and 10 years in
Tanzania. Burundi, Rwanda and South
Sudan have no age limits for used cars.
Value chain
Kenya has three assemblers — Kenya
Vehicles Manufacturer, Isuzu and
Associated Vehicle Assemblers. They
assemble their cars from “completely
knocked down units” that attract zero
duty as per the CET. However, if they
import “completely build units” they pay
applicable duty as per the CET.
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6 Africa Automotive News l 2019 September-October issue l 2019