Realist, not conformist analysis of the latest financial, business and political news

Kenya’s Very Silly Ban On Second Hand Car Imports

Kenya has a strange – silly even – ban on the import of certain second hand cars. Even if we accept – which we don’t – the reasoning behind the ban on cars over a certain age that’s still the wrong way to achieve the desired goal. Thus, yes, the system is silly.

The aim, the declared one at least, is to reduce emissions. OK, let’s run with that for the moment. So, cars that are older than 8 years cannot be imported. This limit is now to drop to 5 years old. Yet there’s no connection between the age of a car and the level of emissions. Thus such a ban doesn’t address the claimed goal, that control of emissions.

A well maintained and small engined car that is 10 years old has lower emissions than either a larger engined but new car, or a badly maintained one of near any age. There’s just not that necessary connection between age and emissions for the ban to be effective at the goal.

This is therefore just bad policy, silly:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The age limit for imported second-hand cars is set to drop from eight to five years starting July, setting the stage for a steep increase in prices and taxes payable on the units. Trade secretary Peter Munya has directed the Kenya Bureau of Standards (Kebs) to draft legal amendments lowering the age limit and raising allowable exhaust emission standards for all vehicle imports. The new regulations, which Mr Munya has directed Kebs to draft by tomorrow, January 15, will pave the way for gazettement and official enforcement of the changes after Treasury secretary Henry Rotich’s Budget presentation in June. Implementation of the order will immediately raise the price of almost all second hand vehicle imports to above Sh1 million, with the cost increase ranging from hundreds of thousands to millions of shillings depending on the model. Second hand car imports are highly popular with majority of Kenyans owing to their affordability compared to locally assembled units or new imports. [/perfectpullquote]

We’d not accept that emissions are that important anyway. Kenya is not a notably rich society, the utility derived from gaining access to cheap transport is going to be greater than the disutility from greater emissions. But even if this weren’t true the regulation still wouldn’t work for that first reason. If you desire to limit emissions from imported cars then limit imports to those cars with low emissions, don’t use an ineffective proxy like age.

As to why the age limit and the reduction, the clue is in the “locally assembled units”. There are people desperately trying to produce cars locally and they’re really not happy with the idea that people can bring in their own perfectly good substitutes in competition. Thus they’d like to see the importation of such substitutes banned – they’re getting their way at the inexpensive end of the range anyway.

It’s just not good policy now, is it? Making Kenyans poorer by restricting their access to transport options while claiming it’s all about emissions, despite the regulations not actually addressing emissions, only protecting the local car industry.

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