Opinion: How Kenya can turn debt burden to EV job creation engine

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Kenya holds several strategic advantages that could make it a regional leader in electric mobility, writes Hans Van Toor, Strategy and Innovation Lead at EV firm Roam. In the late 20th century, southeast Asia rapidly industrialised. How can Kenya leverage similar forces? There are signs, he says, that show Kenya can lead in producing electric motorcycles and buses.

• Mr Van Toor supports industrial policy development as chair of the electric mobility sub-sector at the Kenya Association of Manufacturers (KAM). He is also the founder of investment firm TES Ventures.

• With Kenya diversifying its national debt portfolio, a debt-for-jobs swap could help unlock the EV opportunity. A phased 10–15 year IMF-backed plan could create thousands of green jobs, attract foreign direct investment, and develop a resilient local supply chain. 

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By Hans Van Toor

The EV transition creates a unique opportunity for Kenya, but the window of opportunity is closing. The global automotive industry is a three trillion dollar industry. Now it is shifting across powertrain, supply chain and geography.

Kenya has a unique position to capture the EV opportunity with key strategic advantages;

a)  A booming EV startup ecosystem.

b)  A hub for many development finance institutions.

c)  Affordable and clean geothermal and hydro renewable energy.

d)  A regional hub for local and international talent.

e)  Industrial policies which have shaped a regional multi-billion-dollar offtake and operator market of commercial vehicles and a capable contract assembly and automotive components supply market. 

The industrial policies, including KS1515; legal notice 112, 84 and the upcoming EV amendments; and the upcoming Automotive Bill provide a foundation for the successful development of the sector so far and in the near future.

A sector that provides affordable, clean access to transport while creating high value jobs, builds an industrial base for valorizing underutilized nighttime energy and a fiscal income base.

The Kenya government does not have the budget, expertise or governance structures today to develop, implement, monitor and progress the industrial policy needed to capture this opportunity. The Kenyan government does have a debt burden which stifles growth of the economy.

The Kenyan government is actively diversifying their debt portfolio away from Europe and the United States. A strategically wise move. But could IMF (International Monetary Finance) support? I believe it can, with a win-win outcome. How?

Through a debt for jobs swap structure.

The structure would have a phased approach. Each phase would provide staged concessionality on debt for the Kenyan government. For example lower interest rates based on better credit ratings. Each phase would have clear development steps in terms of industrial policy implementation and adherence, public and private sector development. 

The phases would monitor direct and indirect job creation, curriculum quality and quantity in the sector, foreign direct investment, local content percentage and supplier development, local and international companies investment in upstream developments, export etc.

This 10 to 15 year plan over three to four stages, would need careful design and consideration, but the window of opportunity is now and I believe this opportunity is a once in a generation opportunity that could have a major, positive macroeconomic impact for Kenya and (East) Africa.