Written by: John Msingo
There was a time in Kenya when you could go for even a whole day without seeing a motorbike. Yes as unbelievable as that sounds it is true.
There was a time in Kenya where you could go for even a whole day without seeing a motorbike. Yes as unbelievable as that sounds it is true. What happened, how is it that now as I am writing this article in a café I can hear one and I am very sure that you cannot go more than 150 meters in Nairobi without seeing one.
The genesis was a bill that zero-rated boda bodas of up to 250 cc in 2008, by the Kibaki government. Before that in 2007, the registered number of motorcycles in 2005 was 3,759. After this bill, the registered number grew to 91,151 in 2009! Talk about exponential growth.
This growth gave birth to a whole new industry. There are varying reported numbers from 1.2, 1.4 to even 1.5 million people working directly on boda bodas. Yes, that’s right, at least more than a million people earn their daily bread from this sector. Indirectly, we now have 8 motorcycle assembly plants spread across the country further adding to those that this new industry has employed.
Further, down the value chain, numerous companies that finance these assets have been formed. All these people are directly employed by the sector in my eyes. The effect of this industry is not only in terms of employment. Numerous parts of the country which were inaccessible have now been opened up due to this mode of transport. Almost everyone in the major cities has that boda guy back home. These people make everything move from building materials, and food products to the market, to just people from the bus stop towards hard to reach places. The impact that this industry has had on the Kenyan economy is indisputable.
Quantifying that impact in numbers, a study done by one of the motorcycle assemblers above found that boda boda drivers earn about 1 billion, yes 1 billion Kenya shillings a day. This is roughly equivalent to 3.4% of Kenya’s GDP in 2022. They buy around 300 M worth of fuel a day and this equates to about 60 billion annually collected by KRA from taxes. About 75 % of the riders are youth who earn about 1000 per day from 15 rides. This truly is an industry that has touched every facet of the economy.
In May 2023, one motor vehicle supplier informed the public that motorcycle sales had dropped by 58%. Many factors contribute to this, the major one being in my eyes the rising cost of fuel. The cost of fuel in May 2022 was 147.86 KSHS. In May 2023 the cost was 182.70. That’s an increase of more than 34.84 kshs. More than 1 million boda boda riders are finding it hard to cope. Most of the bikes are financed by micro-finances which require payment usually between 4$ to 6$ on a daily basis and surely if you cannot make ends meet what are you to do?
Kenya’s President Launches The Boda Care Program, Signs Bill Encouraging Local Manufacturing Of E-Mobility Products – https://t.co/c3VUnPEh4C
— MarkHankinsSolar (@MHankinsSolar) June 27, 2023
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Here’s an option. I have a boda guy just like every Kenyan called Richard. Richard has been in the business for more than 5 years. He is what you call a veteran. He has built his home and has bought a pro-box just from working on bodas bodas ( I found out all of this from the numerous deliveries and trips he has taken me on).
He got a new bike which has been operating for 5 months. Recently his bike was confiscated by the police and he left it with them for more than a week. He reverted to an older bike he was using. He used the older bike for a week, only a week. He went back and got his new bike from the police station. The bike is now back on the road and he is very happy.
What I have not told you is that Richard’s new bike was electric. This is the reason he is my boda guy. Now I am very biased obviously. But there is nothing as satisfying as hearing the change that you advocate for is changing lives. He went back to a normal bike and found it did not make sense to him. I want that to sink in.
As far as sinking in goes, the president recently said that Kenya uses 500M USD a month to import fuel. All that USD leaves our shores and goes to other economies. What would happen if a fraction of this remained in the country? We are currently reeling from a shortage of foreign exchange that is affecting every single commodity that is imported.
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Another thing that is imported are normal motorbikes. The 8 assemblers mentioned above usually bring in CKDs that are then assembled here. Several Electric bike companies in the country are in various stages of R and D. The aim is to fully manufacture bikes in the country. Whole new LOCAL value chains can be created to supply this new industry.
This new industry got a boost when the president recently announced that some incentives are coming to help incentivise its growth. Mr. President, we at EMAK are looking forward to those incentives and we cannot wait to help you build your legacy both locally like former president Kibaki and internationally as the president taking a leading role in combating climate change like another one of our heroes Tomas Sankara.
As shown, just removing VAT on bikes back in 2008 birthed this new industry. Can we do the same for E-mobility?
John Msingo is in the steering committee of EMAK (E mobility Association of Kenya) the industry association representing Kenyan E mobility companies. He is also the CRO of EVChaja, a company that installs , operates and maintains electric vehicle charging infrastructure. Finally, he is the East African moderator for AfricaNEV a non-profit whose aim is to accelerate the adoption of E mobility on the continent by capacity building, policy advocacy, creating awareness and linking different players in the value chain.
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