Industry linkages crucial in promoting automotive microenterprises

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 found unqualified artisans masked as mechanics.

Majority only have skills acquired from acting as ‘spanner boys’. They lack professional know-how and employ rudimentary methods, most of which result into costly damages for the motor vehicle owners.

Yet again some of these youth only while away their time at theyards for lack of anything to do. It is factual that majority of the idle and unemployed youth are found in the informal economic sector, to which the small-scale automotive businesses belongs. This is a clear manifestation of the desperate situation of the youth versus their entrepreneurial and innovative skills.

The Kenya Economic Survey Report 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 persons. However, although the informal sector provides employment opportunities, it is characterised by underemployment and low quality jobs thereby increasing vulnerability to poverty. In Kenya, 17 per cent of the labour force is employed in the formal sector while the remaining 83 per cent are engaged in the informal sector.

There are myriad opportunities in the informal sector whose rapid growth in the last decade makes it a frontier of economic success for the youth. The small-scale automotive repair sub-sector in Kenya has recorded tremendous growth, with between 3,000 – 9,000 motor vehicles being imported monthly into Kenya. The Kenya Revenue authority predicts that there will be over 5 million motor vehicles on Kenyan roads by 2030. This means more manpower to address current and expected rising motor vehicle 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, Toyota and US-based Daimler Trucks Asia among others are some of the global automobile companies with major operations in Kenya.
These developments therefore present the informal automotive engineering sector with the motivation and potential to formalise and organise its operations, and subsequently reap from the flourishing industry.

In his research, Kilemi Mwiria, in Youth Unemployment in Kenya: A Ticking Time Bomb, 2016, established that there’s a huge demand for trained motor vehicle mechanics from companies such as Toyota, Nissan and luxury vehicle agents such as Mercedes and BMW, especially if trainees have some dealership experience. He opines that this category could receive short-term training in partnership with dealership companies operating in Kenya. Because many of those available for overseas jobs have little if any formal training there is also need to impart minimum formal educational skills to these youth. Apart from supporting curriculum development and standardisation of the courses offered, transnational corporations could sponsor students for internship during and after the formal training. The graduates are good candidates for the employment in these corporates.

Further, and to address the skills gap, Kenya could adopt feasible and legislated approach to skill development that covers preliminary vocational education and training, further vocational education and training, careers, employability, occupational competence and identity in collaboration with the business sector.A good example is Germany that enjoys low youth unemployment and high level skills where over 50 per cent of all school-leavers undergo vocational training provided by companies which consider the dual vocational education and training system the best way to acquire skilled staff. This system, which is not the same as the training in “technical schools”, increases youth’s preparedness for the labour market and employment chances.

KCB Foundation through 2jiajiri programme has forged partnerships that address skills and business capital gaps to enable the youth to effectively engage in sustainable automotive microenterprises. The KCB Foundation, Toyota Kenya Foundation Registered Trustees (TKFRT) and Toyota Kenya Limited last year signed a partnership that will see automotive engineering graduates certified to own Toyota Service centres. The partnership will enhance skills development and business start-ups for youth in automotive engineering. Under the arrangement, young people will acquire automotive and business skills that will enable them to start their own businesses along the automotive engineering value chain.

Top students of the KCB Foundation’s 2jiajiri automotive class will attend automotive engineering classes for a further 12 months at the Toyota Academy under the Toyota Service Technician of 21st Century” (TST21) programme.
Under the partnership, the KCB Foundation is pooling resources in provision of scholarships to youth in auto mechanics to skill and upskill them to appropriate levels that allows them to compete for the TST21 certificate.

TKFRT is upskilling the trainees for one year, starting with 12 of them who were the crème de la crème of the inaugural class of 2016 and upon satisfactory completion, will be certified as TST21 Graduates recognised by Toyota Kenya Limited. Youth who benefit from the programme will be certified to set up garages as Toyota Kenya Limited Appointed Service Centre (TKASC), provided they meet the set criteria. They will then be legible for seed capital from KCB Foundation under the 2Jiajiri loan to set up a TKASC which will consist of a car wash, a maintenance bay and a spare part unit, thus creating several jobs for their peers. One service centre can create about 300 jobs. KCB Foundation will leverage on Toyota Kenya Limited’s plan to expand service centres across Kenya in a bid to open up the automotive industry and provide employment to Kenyan youth.

Out of the over 12,500 beneficiaries of KCB Foundation’s 2jiajiri programme in various sectors, more than 500 youth have so far benefitted from the 2jiajiri automotive training.

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

Jane Mwangi is the Executive Director of KCB Foundation. jamwangi@kcb.co.ke

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