While some countries successfully transitioned from poverty to prosperity in three decades (we have sung our voices hoarse in praise of Singapore, South Korea…), Uganda remains among those that are yet to attain a significant wealth status six decades after independence, despite being enormously endowed with resources.
So much remains undone in economic sectors where the country has comparative advantage yet our youth are falling prey to human traffickers out of desperation for jobs. The example of dozens of (mostly) IT graduates who recently ended up being sold as slave soldiers in an Asian guerilla war they knew nothing about is just one of the heart-breaking examples.
In the buildup to the 2024/25 national budget, we witnessed the rather speedy upward revision on the expenditure side from about sh52 trillion 72trillion. Where the extra 20 trillion on the income side will come from is another matter, but for now, the question bothering some of us is how the extra expenditure of nearly 40% will significantly change the fortunes of our country and its people.
If you announced to your family that you intend to spend the next 12 months spending 40% above the usual without a clearly convincing growth in your income, your spouse and perceptive children would be concerned, as they don’t want you to join some five hundred fellows languishing in Luzira for failure to pay their debts.
Anybody who bothers to understand the macro-economy of Uganda knows that the country is bleeding. And like any accident victim, the immediate step to take is to stop the bleeding before even the doctors take over. This is not even the place to talk about the bleeding through corruption – that is for law enforcement personnel with the mandate to fight crime. Let us look at the other bleeding which is guaranteed to drain the life of Uganda’s economy if not addressed fast enough, namely debt servicing and the import bill.
Earlier this year, one aspect of the country’s import bill was brought to the public’s notice; that some Kenya-based dealers were blocking Uganda National Oil Company’s efforts to import its fuel directly, a move that would save this country about a billion dollars which the middlemen suck out of Ugandans’ pockets in real cash every year.
The Kenyan High Court was actually used to block Kampala’s efforts, as Uganda’s Energy minister recounted the many frustrating trips she had made to Nairobi only to be served hot air at the highest level of engagement. A desperate Uganda turned to the dependable Tanzania and President Samia Suluhu put in a hundred and one percent efforts to help Uganda import its fuel through Dar es Salaam port.
It seems things changed again and Uganda is back to the Kenya route, so Ugandans wait to see if the fuel pump price will soon fall by half, or at least by a quarter, after Kenya presumably relented and given Uganda a deal so wonderful that Mama Samia’s offers have had to be set aside.
One the debt side, the same item of energy still features. Uganda has always borrowed to build electricity generation dams. Indeed, possibly the first foreign development loan Uganda took was for building the Owen Falls dam at Jinja. It was guaranteed by the colonial master as the country approached independence, and the then Uganda Electricity Board had to ensure it collected the loan repayment money until the debt was fully paid. If only the MDAs in whose name loans are incurred today were also tasked to find the repayment money! But that would probably be expecting too much from today’s crop of managers.
So, we borrow money to build dams to generate electricity, a big quantity of which is not consumed for a number of reasons, including there not being enough distribution infrastructure, otherwise known as the grid. But we have to pay the debts in full while not selling all the electricity. But the same government has determinedly sponsored the development of the automotive industry based on electric vehicle manufacturing, e-mobility.
The government agency spearheading this is called Kiira (the local name of the river on which most of the country’s electricity is generated – meaning the sound of the falls where the dams are built), and all the vehicles it makes for research and for the market are designed by young Ugandan engineers.
It is sad that to this day, you hear knowledgeable Ugandans still asking if the Kayoola buses are made by Ugandans or “just assembled”. That is another story though, but suffice it to say that today no sane vehicle maker makes all or even most of the components; they design and contract different entities across the globe to make them for cost effectiveness.
That is where the debt problem meets the import problem and they conspire to push the country down the precipice. Fortunately the government of Yoweri Museveni had the foresight to initiate Uganda’s own automotive industry based on electric power.
If public transport can be powered with electricity, the fuel imports would be cut, but the same stone would kill the second bird that conspires with the import bill to strangle Uganda, namely debt, by providing market for the unconsumed electricity, thus generating the revenue to pay the debt.
If we were really serious on stopping the economic bleeding, at least one of the 20 additional trillions would be devoted to the national e-mobility industry. This trillion would certainly be recovered with time and reverted to the Treasury inside a decade.
Suppose as a result of investing a trillion in the Jinja-based e-mobility plant and inputs, Kiira Motors made only one bus, its unit cost would be a trillion shillings. If they go ahead and make a thousand buses the unit cost would be a billion shillings. How many electric buses (of different sizes) would be needed to serve Uganda’s public transport needs?
Suppose only ten thousand buses were needed/produced? Each would have cost a hundred million. These figures are not from the industry but used here to simplify comprehension of what is at stake and the achievability of solution to the economic bleeding that is driving the country towards re-colonization (should it ultimately fail to pay). You may be aware that Ethiopia has already banned (importation of) fuel vehicles, so the discussion here is not theory, but something already under serious implementation elsewhere.
To help the entire populace wrap their heads around the rather new concept of e-mobility and get their buy-in to support the acceleration of e-mobility, the government should be like a good teacher who starts from the known towards the unknown.
A peasant in Bundibugyo, Kiboga or Nakapiripirit can be given the analogy of producing eggs, with an egg today costing sh500 on the open market. To produce the first egg on your road to economic independence and prosperity, you need to buy several acres of land worth a hundred million shillings to grow the feedstock, construct buildings for the poultry farm, install a milling machine to prepare the feeds, procure vaccines for the birds, equipment to hatch the chicks and a budget to maintain the chicken houses so that finally you produce the egg at sh200 and stop begging and being blackmailed by external producers. But the unit cost of the first egg would have been maybe two hundred million shillings, but after a couple of years the cost will have fallen a million times to two hundred shillings.
Uganda has already created the capacity to make electric buses and the first ones have been on the road for five years, clocking tens of thousands kilometres without any technical failure – a remarkable record for debutants as Original Equipment Manufacturers (OEM) in the industry.
So the government needs to stop operating in silos. The way things look, one wants to ask if the Finance ministry is aware that the Technology ministry has the key to alleviate the debt and import bill crisis; if the Environment ministry knows that the Technology ministry has the solution to the pollution; if the Health ministry is aware that e-mobility can stop over half of the respiratory diseases. And yes, the health of the Ugandan economy and of the population, can be rapidly restored if the adoption of electric mobility is fast tracked.
