Uganda currently loses approximately Shs1.98 trillion annually in the importation of vehicles yet they can be made in Uganda. It is not just money that is lost to the markets where cars originate from, jobs are lost too. The global automotive industry is a catalyst for the development of other industries. Where factories exist, many jobs are created.
On average, a car has 30,000 parts which are made by many businesses in the automotive value chain. These businesses supply the vehicle manufacturers. As President Yoweri Museveni said over the weekend while laying the foundation stone at the Kiira Vehicle Plant site in the Jinja Industrial and Business Park, Uganda cannot continue looking without participation in the global automotive industry which is valued at over 5 trillion US dollars .
Experts project the global automotive industry to grow just shy of US$9 trillion by the year 2030 with new vehicle sales accounting to about 38% of this value.
President Museveni’s appearance at the Kiira Vehicle Plant and commitment to find Shs141 billion needed to complete the first phase of the start facilities shows that Uganda will not be a bystander in this lucrative global automotive industry anymore .
Already ,Kiira Motors has created shockwaves in the region by signing an agreement to build 1,030 buses (50 of which will be fully electric) for the Mass Transit Bus System operated by Tondeka Metro, a transport company, and financed by RentCo Africa. The Mass Transit Bus System is set to modernize the transport landscape in the Greater Kampala Metropolitan Area. It is such offtake agreements that will see Uganda creating over 100,000 jobs directly and indirectly in the medium term.
This follows the definitive steps the government has taken towards building the indigenous motor vehicle industry in Uganda. In April 2018, Cabinet of the Republic of Uganda approved the roadmap and seed fund for the establishment of the Kiira Vehicle Plant on 100 acres of land. The steps taken are based on the understanding that building the indigenous motor vehicle industry provides an unprecedented opportunity for promoting value addition to Uganda’s minerals and other natural resources with the view of import substitution and export promotion of motor vehicles, vehicle parts, components and systems.
Government acting through Uganda National Bureau of Standards acquired a World Manufacturer Identifier (WMI) for Uganda “BU”, from the International Society of Automotive Engineers (SAE). Vehicles produced in Uganda can now be uniquely identified in the international market paving way for export of vehicles made in Uganda
The investment in the establishment of the Kiira Vehicle Plant has already contributed over Shs28 billion to the local economy through local sourcing of construction materials: sand, reinforcement and structural steel, and cement among others.
The construction of the Kiira Vehicle Plant is undertaken by the UPDF engineering brigade through National Enterprise corporation (NEC) – the business arm of the UPDF. The works commenced in February 2019 with progress at 85% as of July 2021. The strategic investment toward the establishment of the Kiira Vehicle Plant has drawn interest by a wide range of actors for participation in building the indigenous motor vehicle industry.
The economic benefits
The Kiira Vehicle Plant Start-Up Facilities are designed for the production of buses (electric and internal combustion engine) targeting the domestic and regional market with a goal of 65% supply chain localization by 2030. The plant will provide contract-manufacturing services for multiple Original Equipment Manufacturers (OEMs) participating in the regional market enabling them to enhance automotive local content participation while offsetting costs of logistics and benefiting from the ingredient fiscal incentive regime.
Uganda is endowed with minerals, which can be used for vehicle parts manufacturing including iron ore for automotive steel; silica sand for glass; rare earth elements for glass glazing, catalytic converters, batteries, & electronics; graphite for brake pads; oil for plastics; cobalt & lithium for batteries; kaolin, marble and vermiculite for paint; tungsten, columbite, tantalite, chromite and titanium for metal alloys; copper for auto electric conductors and motors, among others. In his Remarks, H.E. President Yoweri Musveni emphasized the need to work with the private sector, to see to it that as many vehicle parts, components and systems are made in Uganda. The Kiira Vehicle Plant alone cannot produce all these vehicle parts, components and systems.
“Sustainable industrialization of Uganda’s economy forms the essence of the country’s Vision 2040, and the Third National Development Plan (NDP III),” says Dr Monica Musenero, the new Minister for Science, Technology and Innovation. “Successful industrialization is hinged on development of the key industrial sectors including the automotive industry through import substitution and promotion of local manufacturing and mineral-based industrialization,” she adds.
What has to be done for the development of Uganda’s Motor Vehicle Industry to fully be realized
According to the, Executive Chairman Kiira Motors Corporation , Prof. Sandy Stevens Tickodri-Togboa -building on the momentum garnered, the following are key interventions to harnessing the potential of the Kiira Vehicle Plant Investment and establishment of the Automotive Industry and Technology Park for supply chain localization:
Fully capitalize Kiira Motors Corporation to Operationalize the Kiira Vehicle Plant in Jinja and establish the Automotive Industrial and Technology Parks to Support a Wide Range of Investments in Motor Vehicle & Parts Manufacturing, Vehicle Testing, Automotive Engineering, Research & Development, Technology Innovation, and Recycling Facilities for End-of-Life Automotive Technology.
Guarantee offtake market for Buses, Trucks, Pick-ups and SUVs by signing offtake agreements with domestic motor vehicle manufacturers.
Actively Promote Shift to High Volume Vehicles ultimately using Environmentally Friendly Powertrains for Public Transport;
Regulate the Importation of Used Motor Vehicles, Used Auto Parts and Fully Built Units;
Streamline the Motor Vehicle Registration Process to Incorporate Electric Vehicles and other Powertrain Technologies;
Establish Charging Infrastructure in Cities, along Highways, at Airports and Tourism Sites to Promote the Shift to Electric Mobility and Explore a Preferred Energy Tariff for EV Charging;
Invest in Mineral Development. Minerals are Vital Ingredients for Localization of Motor Vehicle Part and Components;
Establish an Automotive Industry Skilling Program and Specialized Curricula on Automotive Engineering at Higher Education Institutions;
Institutionalize Key Motor Vehicle Standards and Regulations to engender Safety and enhanced Environment Stewardship while Building the Indigenous Motor Vehicle Industry; and
Put in Place a Comprehensive Facilitative Fiscal Package to Promote Value Addition in the Nascent Automotive Industry for Import Substitution, Supply Chain Localization and Export Promotion
