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Kiira Motors Corporation’s $40 million funding gap is likely to slow down the delivery of 100 electric buses booked by African countries.
Uganda has orders for the electric and low diesel combustion buses from Tanzania, South Africa, Nigeria and Eswatini, according to Finance Minister Matia Kasaija.
On the continent, it is only Uganda manufacturing electric buses, but the capacity remains too low to supply African economies seeking to decarbonise, blamed on underfunding of the project, which has persisted since 2018.
According to Minister Kasaija, so far, 39 buses have been manufactured in Uganda, of which 27 are electric and 12 are low-emission diesel combustion vehicles.
Read:Why e-mobility could make or break EA economies
The budget cuts by the ministry are also delaying the unlocking of the truck body manufacture, vehicle painting, powertrain manufacture and electrical business for KMC. Tickodri-Togboa, Kiira Motors’ executive chairman, doubts Kampala will deliver the 100 orders.
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With Kiira Motors facing little buy-in from government and the private sector shunning it, authorities at KMC are pushing policymakers to hunt for money from other sources.
“We are counting on guidance and support from the government to explore sustainable, timely, and innovative funding for the corporation,” Paul Isaac Musasizi, the CEO, told Parliament in March.
He needs Ush524 billion ($140.6 million) to finance its 2023-2028 five-year business plan, which was presented to Parliament.
The money would be invested in construction, tooling, and furnishing Kiira Vehicle Plant, parts and materials for plant commissioning, master store, human capital and capacity development, business development, and operating expenses.
The heavy capital investment is needed to meet 2,500 vehicles capacity per year at the Jinja Industrial Park, some 80km east of Kampala.
Under KMC’s project implementation matrix, buses were supposed to be the first vehicles to come off the assembly line in mid-2021.
These would have been followed by light to medium duty and pickup trucks in 2022, with a line for SUVs following in 2025.
Executive Sedans that target the elite market would not require an assembly line and would be produced on order under low-volume production from 2025 or earlier, depending on when orders come in.
KMC is also betting on this heavy capital investment to unlock 600 jobs in the plant from the current 168 — in engineering, production, marketing and sales, and finance and administration.
Experts warn that underfunding of KMC will also delay the take-off of other pipeline auxiliary industries projects in Uganda, especially, processing of lithium, a critical mineral used in manufacture of electric car batteries.
Read:Uganda's Kiira Motors in race against time
The country is betting on its lithium deposits in Ntugamo, a border district with Rwanda, to start manufacturing batteries.
In December last year, President Yoweri Museveni met a group of investors from a London-based firm who expressed interest in mining the lithium.
Currently, Uganda imports batteries, which adds to the costs of manufacturers and the final price of vehicles made in Uganda.
The availability of the mineral has encouraged President Museveni to personally invite investors to mine and make batteries in Uganda.
Museveni eyes South African investors invest in Uganda’s lithium battery manufacturing. They boast Africa’s largest automotive manufacturing. South Africa hosts global brands such as Toyota, Isuzu, Volkswagen and Mercedes, among others.
South Africa also announced is likely to start producing its first electric vehicle (EV) in 2026. “We’re already producing hybrids, but we anticipate that the first electric vehicles are likely to be produced by 2026,” Minister of Trade, Industry and Competition, Ebrahim Patel.
The electrification of transport is one of the key pillars underpinning South Africa’s Just Energy Transition (JET) plan for a low-carbon and climate-resilient economy.
The JET plan estimates that an investment of 128.1 billion rand ($6.84 billion) would be needed from 2023–2027 for the transport sector to contribute meaningfully to South Africa’s decarbonisation commitments.
It is also highly integrated into the global supply chain, drawing components from across the world and exporting the final consumer product to more than 150 countries worldwide.
Tanzania represents a significant market for Kiira Motors due to substantial improvements in the country’s public transport system – particularly through the Dar es Salaam Bus Rapid Transit (Dart) project.
This large-scale infrastructure initiative, developed by the Tanzania National Roads Agency (Tanroads), aims to enhance public transportation with a network of dedicated bus lanes, stations, and terminals.
Tanzania also has an underdeveloped for-wheeler electric vehicle industry. According to AfEMA, while Tanzania has grown into one of the biggest electric vehicle markets in Africa, electric two and three-wheelers are dominant category in the country’s roads.
E-Mobility Alliance 2023 report estimated the number of EVs; motorcycles and tricycles in Tanzania are estimated at 5000.
