20091228
allafrica

Revelations that Kenyan lead acid battery makers are running out of raw materials due to increased exports of used car batteries is not only shocking but embarrassing for a country that prides itself in supporting local industries.

The emergence of electric car markets in Western economies and high demand for car batteries in China has fuelled a global demand for lead-acid battery manufacturing with entrepreneurs turning to Africa and by extension Kenya where recyclable lead is sold and categorised as scrap metal.

The development is happening as policymakers, led by mandarins at Treasury, the Ministry of Industrialisation and that of Trade watch.

Kenya appears to have left its doors open--when others have closed theirs.

Uganda and Tanzania, where Kenya exports some of the batteries, have since blocked any exportation of lead from their countries and the Nairobi factories can no longer source from the region.

The situation seems to have been worsened by a decision by Finance Minister Uhuru Kenyatta to remove a 20 per cent export tax on lead and lead scrap.

The tax had been imposed by Mr Kenyatta's predecessor, Amos Kimunya, in 2007 to cushion the sector against Chinese demand for lead used to manufacture batteries for its emerging motor industry.

In the Budget Speech read in June this year, Mr Kenyatta amended the Customs and Excise Act, exempting scrap lead dealers at the Export Processing Zones (EPZs) from the duty.

This has seen lead smelters take advantage of the new law and set up shop within EPZs from where they are shipping lead and other scrap metals out of the country.

Manufacturers say this has led to a surge in exports of used batteries mostly to Asia draining the local industry of the crucial raw materials.

In the wake of the shortage of raw materials, the prices of scrap batteries has almost doubled, shooting from Sh30 in June to Sh52 this month.

This has meant higher production costs for the manufacturers who are already grappling with high energy costs.

Yet the players cannot increase the selling price because imported batteries are cheaper nor can they import the raw material which has in the recent past suffered from price fluctuations in the global lead market.

While this is not the time that the car battery industry is raising alarm over the exports, it raises crucial questions on the seriousness of the Government in addressing the plight of local manufacturers.

It also brings to the spotlight whether the company has clear policies on exactly how to handle the dicey dilemma of allowing exports of raw materials at the expense of local manufactures.

With such a scenario that threatens a multi-billion shilling local industry that employs thousands of Kenyans, it becomes critical that the government listen to manufacturers when they have genuine feelings of being frustrated by certain policies.

With this in mind, Treasury in consultation with other stakeholders should re-look at the existing policy on the lead batteries for a possible review.

Secondly, its important that Kenya observes and follows trends being taken by its peers both in Africa and also globally.

At the same time, the country must protect the local industry from exploitation by foreign merchants.

Besides, Kenya is a signatory to the Basel and Bamako Convention of Hazardous Waste Management and therefore should completely ban the export of old automotive batteries, a step that has already been taken by Tanzania, Uganda, South Africa and a host of other African nations.

It's only after taking such steps that the country would be assured of cheaply sourced raw materials for lead batteries, which could mean good prices for Kenyan made batteries, giving the industry a competitive edge over its rivals.

Without this, we will kill a whole industry.