How industry linkages can steer growth in automotive sector

Tuesday January 2 2018

A garage in downtown Nairobi. PHOTO | NMG

A garage in downtown Nairobi. There are myriad opportunities in the informal sector, whose growth in the past decade makes it a frontier for the economic success of the youth. PHOTO | NMG 

By JANE MWANGI
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Nearly every major urban centre in Kenya has a motor garage or some sort of a motor vehicle repair yard.

Quite often, however, in many of these places are unqualified artisans masquerading as mechanics. The majority only have skills acquired from acting as “spanner boys.” They use rudimentary methods, most of which result in costly damages for the vehicle owners.

Yet some of these youth only while away their time in the yards for lack of anything to do. It is a fact that a majority of the unemployed youth are found in the informal sector.

The Kenya Economic Survey 2017 indicates that the informal sector is the largest contributor to employment for the manufacturing sector, growing by 6.5 per cent in 2016 to 2.7 million jobs. But it is also characterised by underemployment and low-quality jobs, thereby increasing vulnerability to poverty.

In Kenya, 17 per cent of the labour force is in the formal sector. There are, therefore, myriad opportunities in the informal sector, whose growth in the past decade makes it a frontier for the economic success of the youth.

The automotive repair sub-sector has recorded tremendous growth, thanks to the 3,000-9,000 vehicles being imported monthly. The Kenya Revenue authority predicts that there will be more than five million vehicles on Kenyan roads by 2030. This will need more manpower to address current and expected repair needs.

Moreover, several global automotive manufacturers have recently committed to increase production in Kenya, thanks to new fiscal incentives by the government.

Germany’s motoring giant Volkswagen, France’s Peugeot, Japan’s Toyota and US-based Daimler Trucks Asia are some of the global companies with operations in Kenya.

These developments present the informal automotive engineering sub-sector with the motivation and potential to formalise its operations and subsequently gain from the flourishing industry.

Dr Kilemi Mwiria, in his research paper Youth Unemployment in Kenya: A Ticking Time Bomb, 2016, established that there is a huge demand for trained mechanics from companies such as Toyota and luxury vehicle agents such as Mercedes and BMW, especially if they have some dealership experience.

He says that because many of those available for overseas jobs have little or no formal training, there is a need to impart minimum formal skills to them.

Apart from supporting curriculum development and standardisation of the courses offered, multinationals could sponsor students for internship during and after the formal training. The graduates would be good candidates for employment in those corporates.

To address the skills gap, Kenya could adopt a legislated approach to skill development that covers preliminary vocational education and training, careers, employability, occupational competence and identity in collaboration with businesses.

A good example is Germany, which enjoys low youth unemployment and high-level skills, and where more than half of all school-leavers undergo vocational training provided by companies. This system, which is not the same as the training in “technical schools,” increases the youth’s preparedness for the labour market.

The KCB Foundation, through the 2jiajiri programme, has forged partnerships that address skills and business capital gaps to help the youth in automotive microenterprises.

The KCB Foundation, Toyota Kenya Foundation Registered Trustees and Toyota Kenya Ltd in 2016 signed a partnership that will see automotive engineering graduates certified to own Toyota service centres.

Under the arrangement, young people will acquire skills that will help them to start businesses along the automotive engineering value chain. The top students of the 2jiajiri class will attend classes for a further 12 months at the Toyota Academy under the Toyota Service Technician of 21st Century programme.

The youth who benefit from the programme will be certified to set up Toyota Kenya Appointed Service Centres comprising a car wash, a maintenance bay and a spare part unit, provided they meet the set criteria.

They will then be eligible for seed capital from the KCB Foundation under the 2Jiajiri loan scheme. One service centre can create about 300 jobs.

Exploring such partnerships will contribute to generation of professionals for Kenya’s automotive industry and even surplus human capital for the regional and global labour markets.

Jane Mwangi is the executive director of the KCB Foundation; [email protected]