With favorable economic policies, Kenya has become the ideal hub for automotive manufacturers to gain entry into East and Central African regions to grow their business.
Résumé en français: Grâce à des politiques économiques favorables, le Kenya est devenu le centre idéal pour les constructeurs automobiles qui veulent pénétrer dans les régions d'Afrique de l'Est et d'Afrique centrale pour développer leurs activités.
Kenyan President Uhuru Kenyatta (L), flanked by Volkswagen Brand CEO Herbert Diess (R), testing a Polo Vivo hatch-back fresh off the assembly line at Kenya's Thika town industrial area.
Based in Limuru, Auto Springs East Africa is Kenya’s largest original equipment manufacturer to the Kenyan motor vehicle assembly sector. It was established in the year 1979 and has been producing a wide range of products for motor vehicles specifically leaf springs, nuts & bolts (center bolts, U-bolts, wheel studs, shackle pins etc.), and wiring harnesses for various models of commercial vehicles such as cars, trucks and SUVs. In addition to the above, the company manufactures a wide range of agricultural equipment including sugar Mill components. It is also involved in a wide range of chassis reinforcements, extensions and modification of springs to make them suitable for Kenyan roads.
Currently Auto Springs East Africa is positioning itself to serve this growing sector.
For-instance, on the 12th of February, 2018, Ascent Rift Valley Fund (ARVF), a leading SME Private Equity Fund investor signed an investment deal that will see it acquire a majority stake in Auto Springs East Africa.
Ascent Rift Valley Fund will acquire a majority stake in Auto Springs East Africa in a partnership deal with SFC Finance Limited (SFC), a non-bank financial institution which provides secured medium and long-term debt financing to SMEs in the rest of Africa.
This is recorded as Ascent Rift Valley Fund’s first investment in the auto-mobile industry in the East African region.
According to David Owino, Partner at Ascent Capital Advisory Services; He said; “With the investment, Ascent Rift Valley Fund expects to gain a significant share in the growing automobile industry. Besides the capital going to acquiring the majority stake in the company, Ascent announced the financing will be used for product expansion and factory improvements.”
Yet SFC Finance Limited’s Head of Credit Origination, Samia Tnani, stated that, “SFC is pleased to be a debt partner in this transaction, adding to its growing portfolio of financings in East Africa. In addition to meeting the financing need, we look forward to an active participation in the deal, helping Auto Springs to achieve its growth objectives.”
In conclusion, the assembly industry in Kenya is growing with the entry of major international players looking to turn around the local car assembly industry. Last year, Peugeot announced the re-opening of its car assembly facility targeting production of over 1,000 units annually; Volkswagen has also begun production at Kenya Vehicle Manufacturers plant in Thika; Last September, Simba Corporation took full control of Mombasa-based, Associated Vehicle Assemblers (AVA), with plans to expand production with clients such as Toyota Kenya, Scania, Tata and Volvo on board; This year Foton Motors re-entered the market and has joined the assembly line at Associated Vehicle Assemblers.
By Joseph Semuju
Community Manager - AMO
African Mobilities Observatory - AMO, MICHELIN.