Tanzania has officially lifted a 30 per cent excise duty levied on motor vehicles assembled in Kenya in a move that will generate millions of shillings in savings for Kenya’s motor vehicle manufacturing industry.
This comes following the implementation of an agreement reached earlier this year at the 16th ordinary summit of the East African Community (EAC) Heads of State in Nairobi. Among the primary outcomes from the summit was a directive to ministers from the EAC member States to facilitate policy interventions that will promote assembly of motor vehicles in the region and a reduction on second hand car imports.
According to General Motors East Africa Managing Director Rita Kavashe, the zero rating of vehicles from Kenya by Tanzania will not only promote trade between Kenya and Tanzania but will have far reaching implications to the region’s automotive sector.
“We have three main plants in the east Africa region with the capacity of producing 29,000 units in one shift but currently we are utilizing just 32 per cent of this capacity,” she explained.
There is a lot more capacity that the east African region can unlock as the region continues to grow and we are happy that Tanzania has taken the first step because it is a large market which is fast growing,” she said. Kaveshe was speaking at the company’s headquarters during a visit by outgoing Tanzanian President Jakaya Kikwete who was completing a three-day State visit to Kenya.
Kikwete later addressed a combined session of the Kenyan Senate and National Assembly where he took a reconciliatory tone assuring lawmakers that Tanzania will uphold policies that promote regional trade.
“Trade between Kenya and Tanzania has increased by 40 per cent in the last five years and Tanzania is ready to do more trade with Kenya and investments are safe in Kenya so there should be no fear of nationalisation,” he stated.
This year, General Motors, through it’s Tanzanian dealer Quality Group, put up a $6 million (Sh618 million) Isuzu assembling facility in Dar es Salaam to support the distribution of the company’s products into the country.
“We want to push our installed capacity in the region to 100 per cent by 2019 and this will be realised by further integration of the EAC and harmonisation of key trade policies,” stated Ms Kavashe.
The visit by Kikwete indicates a softening of Tanzania’s stance towards Kenya in a move likely to hasten the integration process and increase the value of Kenya’s trade throughout the region.