Tariff Reduction on Bicycles and Parts

Contact: Paul Steely White
Institute for Transportation & Development Policy
Leon Mlambo
Association for Advancing Low-Cost Mobility (AALOCOM)

In light of rising petrol prices, advocacy groups in Kenya and Tanzania are changing the public perception of the bicycle as vital tool for development, and convincing their governments to make bicycles less costly. Kenya recently eliminated the import tariff on bicycles, and Tanzania reduced the duty on bicycle tires.

On June 13th, 2002, the Kenyan government announced the elimination of bicycle import duties. The decision comes on the heels of a rise in petrol prices, and should give a significant boost to bike sales and use. The International Technology Development Group (ITDG) in Kenya was a key force behind the decision.

The lower bike prices will enable more widespread bike ownership, among commuters and bike taxi operators, many of whom are currently renting bicycles. Some existing bike taxi operators complain that the low price of bikes will lead to an influx of taxi operators, creating too much competition to maintain previous incomes. Others say that this fear is unfounded, due to the rising petrol prices that will create more demand for bike taxis.

By contrast, the Tanzanian government has yet to remove bicycle import duties, although they have recently reduced the duty on bicycle tires by 10%. While tires comprise only 1/6 of the price of a new bike, they are the most expensive part that needs routine replacement, so it will be more affordable for people to keep their bikes on the road. In a country where the average price of a bike is Tanzania Shs 60,000 and the per capita income is Tanzania Shs 270,000 per annum (22% of your annual income for a bicycle!), this is an important first step but does not go far enough.

The Association for the Advancement of Low-Cost Mobility, (AALOCOM), the organization that lobbied for the reduction, is taking their campaign farther, hoping to convince the government to follow Kenya's lead and reduce the duty on the entire bike. Leon Mlambo of AALOCOM said, "Éfor AALOCOM it was an important first step in its campaign to make Low Cost Mobility more affordable."

The benefits reducing or eliminating the tax are numerous. With access to this low-cost transportation, villagers can take grain to the market in larger quantity and more quickly; children in rural areas can reduce their travel time to school by hours; traditionally disadvantaged groups, such as women, can increase their access to self-employment opportunities. In short, the benefits of the reduction or elimination of the import duty are significant.

When Ghana eliminated its tariff on the importation of bikes, bike imports skyrocketed 1000%.