Estimating the total value of all cars in Kenya

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

20 February 2022

When Githuku Mungai asked me to estimate the total market value of all the cars in Kenya, my immediate response was that it is zero shillings! My reasoning was that the only way to get the market value of an item is to put it in the market. If all the cars in Kenya were put up for sale, there would be no one to buy; hence the only way to dispose of them would be to give them away free of charge – zero shillings.

But I am quite certain that this is not what Githuku had in mind. The difficult way to go about it is to find out how many cars there are in the country and then try to figure out the average price for one; multiply the two numbers and that’s it.

Now, ever since the government of Kenya stopped the annual road licensing system, there is no central point where data on vehicles on the road is kept. The Registrar knows the number of those registered but has no way of knowing which are still in use.

It is easier to look at insurance records. Presumably, if a car is not in use, it won’t be insured. This data contains information about the insured value of the cars – so there is no need to know how many they are.

The industry report compiled by the Association of Kenya Insurers (AKI) for the year 2020 states that the total amount of premiums paid for private motor vehicles was about Sh23.5 billion. The report does not give a breakdown of the classes of insurance, that is, into comprehensive covers, third-party and so on. My guess is that at least half of the private vehicle are under comprehensive cover and the rest are on third-party only – but I could very well be wrong.

Comprehensive covers are charged at about 5 per cent of the insured value and so, we can safely assume that the average premium rate for all private cars is about 2.5 per cent. Therefore, the total insured value of all motor vehicles is about Sh940 billion. Perhaps we can round that number upward to approximately one trillion shillings.

It is important to note that this is the insured value; that is, the maximum value the insurers are willing to pay the owner in case of loss of total the car. However, insurance companies usually send the car for valuation before insuring it; therefore, the final figure here may not be very far off.