Home Finance & Banking Uganda’s Drive to Manufacture Vehicles for East Africa Gains Momentum

Uganda’s Drive to Manufacture Vehicles for East Africa Gains Momentum

by Tullah Stephen

Uganda’s vision to set up an automotive industry to boost its economy and provide employment for its fast growing population is on course. The Uganda Investment Authority has already commissioned two companies to start car production in the country by 2018. One of them is Kiira Mortors Corporation, which unveiled its first hybrid electric sedan, the Kiira EV SMACK. The East African Business Times Magazine caught up with Allan Muhumuza, the Vice President of marketing and sales at KMC to find out more. Excerpt:

Since announcing your entry into the vehicle production last year, what has been the progress so far?

We are currently on course with the implementation of the first phase of our 25 year business blue print. The first phase involves a number of things.

First is the plant design. We have a plant based at Kagogwa village in Jinja where we obtained a 99-year lease for 100 acres of land.

From the piece of land we are building state-of-the-art facilities for engineering, corporate affairs and a vehicle validation unit.

Other plans include construction and development of the government automotive industry development plan as well as training and recruitment programmes.

We are also seeking for partnership agreements with automotive original equipment manufacturers.

What are some of the production plans you have for KMC?

Production will begin in mid-2018 with a planned capacity of about 3,600 units per year. This will later rising to 9,960 units per year. The first batch of vehicles will be running on fossil fuels with an Internal Combustion Engine. Most of the units are going to be light and medium duty truck.

Who will you be targeting with these trucks?

First, is going to be the government. The government as you know is one of the biggest spenders. But we will also explore other markets such as the business community and the NGOs.  We also intend to penetrate the market deeper and go beyond the borders.

How would you describe the reception to KMC concept vehicles so far?

It has been quite positive. I believe that the market is ready to adopt the vehicles. We have seen some good news in South Africa and Morocco where similar technologies have been launched before. I predict that in the next few years, the engine as it is now will be the ‘dinosaur’ of the automobile industry – extinct.

What does the response mean to Uganda’s auto industry?

It means that people are beginning to view Uganda differently, especially in the auto industry. But, it is also a testament of Uganda’s commitment to exploring clean and green transportation technology. Also, KMC is committed to enhance environmental stewardship as we develop Uganda.

Most people would have expected you to start with the production of the Kayoola Solar buses. Why is this not the case?

When you look at the automotive companies when they release a prototype vehicle, it takes on average seven years before it is introduced in the market. But also considering there are no electric vehicles on the road, we are cautious and still studying the market carefully. We still need time and we are preparing the market for it as well.

In a market filled with Asian brands, how is KMC positioned to penetrate the market with its locally made models? What is your strategy?

Our product will be competitively priced. The fact that they will be made in Uganda means they are certainly going to be cheaper for the population as opposed to importing a vehicle. Also, we are making sure our vehicles can be serviced anywhere in Uganda. The Buy Uganda Build Uganda policy will also play an important role in pushing up the uptake of our products.

How do you read the current trends in the motor industry in Uganda, from your perspective?

The industry has a lot of potential. We have seen the government work towards eliminating the bottlenecks that hinder the ease of doing business. On the other hand the market is now demand-driven and consumers are more informed on what they want.

Among your biggest target is the public transportation. How big is this market?

Kampala Capital City Authority has an existing demand for at least 500 buses for its major routes. The capital is projected to have a mass mobility demand growth estimated to be five times in the next three years exceeding over 700,000 passengers per day. The adjacent routes serving into the capital such as Jinja, Entebbe, Masaka and Bombo road are expected to have 500,000, 200,000 and 300,000 passengers per day respectively. So there is a lot of opportunities.

What are some of the challenges the vehicle industry is experiencing currently?

I believe from an operational outlook, the limited availability and reliability of electricity as well as the availability of skilled labour are going to keep manufacturing costs high for players in Uganda compared to producers elsewhere in the east Africa region.

From a policy point of view, we still need to come up with legislation that will curb importation of used cars.

As the middle-class rises, demand will also rise. It will make perfect sense to locally manufacture cars as opposed to importing them as that will sink back the revenue into the economy.

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