WHY PRESIDENT KENYATTA’S DIASPORA VEHICLE IMPORTS POLICY SHOULD BE REFINED

Following President Uhuru Kenyatta’s 2014 policy announcement regarding Diaspora vehicle importation by those who live in Left Hand Drive countries, the Kenyan treasury via cabinet secretary Henry Rotich announced guidelines that for all intents and purposes impede the president’s directive and must therefore be revisited and revised,https://diasporamessenger.com/guidelines-for-the-importation-of-duty-free-vehicles-by-returning-citizens/.

The purpose of the president’s policy announcement was to even the playing field for the Diaspora so that those of us in LHD countries, primarily North America, can have equal access and protection of the law as our counterparts in Europe with respect to vehicle importation- simple as that. Specifically, because those in Europe and Asia can import vehicles tariff-free, the Diaspora in North America cannot because Kenya banned importation of Left hand vehicles years ago. After several years of lobbying to lift the inequity, President Uhuru Kenyatta finally changed the policy but rather than allow Left Hand Drive imports, he allowed us to buy right hand vehicles in lieu of our Left Hand Drives. Unfortunately, Kenya’s treasury decided to replace this inequity with yet hitherto unheard of encumbrances and caveats that practically make it extremely hard if not entirely impossible for the affected Diaspora to benefit.

There is no question that the President’s announcement was welcome by the affected Diaspora but then along came the arcane and asinine requirements as riders to the president’s policy as follows:

I mean really?! This is yet another example of a pattern emblematic of decisions by Nairobi that epitomizes the wide disconnect between the government and its Diaspora.  It appears to me that the treasury even thought through these provisions at all because they have no nexus whatsoever between what the president announced and their purpose. The President was clear in providing relief to the Diaspora in this regard but Rotich and the Kenya Revenue Authority, perhaps in a rush to implement the policy, rather than ease the burden as intended by the president, they actually exacerbated it by making it impractical and discriminatory instead.

In 1. above, requiring residents to prove ownership of a vehicle in the country of residence for a period of at least one year to qualify for a duty free import is unnecessary and frankly useless for the purposes of this policy. What purpose does it serve? If the idea is equity as President Kenyatta intended, then this rule affects ALL diaspora whether they owned a vehicle or not. In the past, nobody was required to prove ownership of a vehicle because the mere fact that you imported a car took care of that. It should be the same in this case, I don’t think the president intended to substitute the inequities visited on the diaspora with yet more hardships. The rules MUST be standard and uniform; the president’s directive is an aberration to accommodate unique circumstances, the fact that the Diaspora is now allowed to buy a replacement/new right hand vehicle and import it to Kenya for personal use should be enough, no more strings should be attached to it.

In 2, Rotich says that the Diaspora “must also provide proof of vehicle deregistration at the time of changing residence before being allowed to import a vehicle from another country.”  My question, is this requirement necessary and what purposes does it serve? What does it prove? For starters are the Kenyans in right hand drive countries also required to show deregistration? Of course NOT, so why us? What does it matter to the government that a vehicle is deregistered? What difference does it make? I understand the premise is that you should show that you got rid of your old vehicle but for what? Why?  Besides, it is NOT the role of the government to govern disposition of personal property; the government’s role in this case is limited to providing relief from tariffs to the disadvantaged Diaspora, to even the playing field, not imposing additional intrusive and unrelated caveats as a condition precedent- NO!

In 3, Rotich stipulates, “The vehicle must be of the same category as the vehicle owned in country of residence.” Again, this indicates to me that these folks didn’t think through the implementation beyond just putting sentences together. Clearly they appear not to privy to what they want to implement. The government simply need provide proper guidance of the parameters they will exempt from tariffs, it is NOT rocket science. They have had this program for decades, I think the last upper limit used to be a capacity of 2400 CC, not sure what it is now but my point is simple- maintain a uniform regime.

In 4, the Treasury states, “The vehicle imported from another country will be entered provisionally pending confirmation of adherence to the guidelines”- this is ambiguous and fails to provide the certainty that the Diaspora needs to make this work. It leaves too much to inference and subject to abuse. What I fear is scenarios where the Diaspora import vehicles and once in Kenya the revenue staff and clerks invoke some of these rules at the time of clearance as a way to induce bribes. I know I am being speculative on this but it is well within the realm of possibilities and very likely that KRA staff will demand prove of items 1 through 3 above before you can clear your vehicle or else… My point is nothing should be left to interpretation or inference, the president’s policy should be clearly spelled out in clear language of why, what, when, who and how and we expect nothing less of the Treasury than just that.

If I were in charge of implementing the President’s policy, I would use it as the best tool to a) cement Kenya’s sovereignty b) enhance the government’s standing with the Diaspora through equity, and c) raise additional revenue for the government. And here is how:

Twice the Kenyan government withheld implementing the president’s policy citing differences with the other East African countries on the protocol to use. The government said it was to check and see what comity existed between the countries that would allow Kenya to implement the policy on its own soil! Really?! Really. Personally I was flabbergasted when I heard that, the very idea that Kenya’s sovereignty and constitution was actually subordinate to and subject to other countries approval befuddles me. I would have implemented the policy immediately and independently i.e. NOT consult with other countries on what I do in my own.

Clearly this is perhaps the thorniest and yet the most opportune subject of utmost interest to both the Diaspora and the Kenyan government- this would be the best opportunity to bridge the ever expansive gaps between stakeholders. With that in mind, I would do away with the Rotich caveats and institute a standard regime that serves the Diaspora as equitably and uniformly as possible. Specifically, I would simply set up an exempt valuation amount threshold that applies to ALL Diaspora around the world. My baseline would be based on the highest fair market value of vehicles currently exempt from import duty, let’s say KSH 2 Million- which should cover an average size car/SUV. So when a Diaspora imports such a vehicle, the process is clear and seamless; the vehicle is appraised and if the value is higher than two Million, the returning resident pays import duty on the difference. This way, the process is straight forward, non-discriminatory and in fact can incentivize the Diaspora to import high-end vehicles which can result in incremental revenue to the treasury. I would also get rid of the third party “Valuers” and “valuation companies”some of whom charge in the upward of 10% of the assessed value of the vehicle for doing literary nothing but fill out paperwork- it is unscrupulous to say the least and I would end the practice once and for all.

Whereas there is no study or evidence to definitively support this assertion, I believe that the president’s policy can actually be an incremental tax revenue generator money generator for the country because expanding the tariff free regime will invariably encourage more Diaspora to import vehicles most of which would be valued above the tariff exemption and thereby generate more revenue for the government. The rules announced by Rotich are too restrictive and they contract the government’s revenue generating capacity instead of expanding it and so I would scrap them all together.

Finally, I expect the government to revisit these rules in the coming weeks and months as to make them consistent with the president’s intent of addressing the inequities of the government’s treatment of its Diaspora. Again, from our vantage point, the president meant to lift those inequities, not replace them with yet more inequities or additional encumbrances and I hope for corrective action very soon.

By David ochwangi