By Davison Vandira
The capacity of local firms to meet demand for vehicles has come under scrutiny following the gazetting of a Statutory Instrument restricting the importation of vehicles manufactured 10 or more years ago.
Under Statutory Instrument 89 of 2021 which came into effect this Friday, second hand vehicles manufactured 10 years ago will no longer be allowed into the country save for commercial vehicles and those for agricultural purposes.
The move is meant to boost the local motor industry’s capacity, reduce the country’s import bill and greenhouse emissions.
While the development is justified from an economic point of view, economists are however worried about the local motor industry’s capacity to meet local demand.
Economist Christopher Mugaga said, “While it is a good move of putting restrictions there is need to come up with a balance as our local car manufacturers are at the moment not in a position to support these restrictions so there is a need to do that in a phased approach as these vehicles are playing a major role in enabling economic activities.”
Another economist, Titus Mukove said, “The local industry will not be able to cope with the increase in demand and it may take time for them to invest in their capacity which will create a huge output gap.”
In South Africa, vehicle import restrictions have been implemented successfully due to the local industry’s capacity to meet demand, and sound financial mechanisms that allow hire purchase even at zero percent deposit.