The financing push comes as the government steps up efforts to build a stronger automotive industry through local value addition Kenya is shifting its industrial financing strategy towards supply chain financing as it seeks to accelerate growth in local manufacturing, create jobs and reduce dependence on imports.
The new approach will target manufacturers that already have confirmed orders and established markets but lack the capital needed to expand production and meet rising demand. Ministry of Trade and Investments director for automotive, Elijah Okumu, said the government was moving away from a model focused mainly on helping entrepreneurs start businesses and instead prioritising firms that are ready to scale.
“Businesses that have already established operations and secured market demand but require capital to scale will be the focus. We are moving beyond just helping people start businesses. We are supporting companies that already have orders and contracts but lack the equipment and capacity needed to meet growing demand,” said Okumu.
The strategy will be implemented through a financing programme backed by a 15 billion Japanese Yen (about Sh12 billion) Samurai Loan from Japan. Under the initiative, motor vehicle assemblers and automotive parts manufacturers will access soft loans of up to Sh7.5 billion to finance expansion projects and strengthen local production networks.
The government plans to use the facility to support both suppliers and buyers within the automotive value chain. On the supply side, component manufacturers will access affordable financing to acquire machinery, increase production capacity and fulfil contracts from local assemblers.
Officials say the model is designed to unlock growth among firms that are already integrated into manufacturing supply chains but are constrained by limited access to long-term capital. The initiative is expected to deepen local sourcing of automotive components as the government seeks to strengthen domestic manufacturing linkages.
Currently, 14 vehicle parts are protected under local content regulations to discourage imports where local alternatives exist. The government plans to increase the number to 31 within the next two to three years. “We want anything that can be manufactured locally to be produced in Kenya.
Manufacturing creates jobs and transfers technology in ways that trading cannot,” Okumu said. The programme will provide affordable financing for the purchase of locally assembled vehicles through partnerships with assemblers. Officials expect the lower-cost loans to stimulate demand and support growth in local assembly operations.