Automotive Sector in Uganda: Vehicles Made in Uganda by Kiira Motors Corporation

Interview with Prof. Sandy Stevens Tickodri-Togboa, Executive Chairman of Kiira Motors Corporation (KMC)

What is your assessment of the automotive sector in Uganda? What are the latest trends?

Until very recently, you would not say that there was an automotive sector in Uganda. We have been engaged in essentially importing vehicles, mostly used, that are on average about 16 years old from the time of registration. That automotive industry had mostly been focused on maintaining, importing, repairing, etc. The idea of developing an automotive sector in Uganda can be traced to what we did at Makerere University in 2007. I led a team of young people to participate in an international consortium of 31 universities that was then led by MIT. After doing rounds of elimination, Makerere University ended up being the only African University to take part. The agenda was to see if we could use the same technologies that had been used to go to space and the moon to solve Earth problems. We assembled around that theme and the first vehicle that we set out to build was known as Vision 200. The intention was to build it for the Indian market and make sure that it was affordable. The price was to be about $5,000; although, by the time we finished it was higher. The rest of the universities had the capacity to take this Vision 200 to their countries and show what they had done, but I did not have the money to do that in Uganda. I had not gotten in touch with the President or any businesses. Given that we were able to participate effectively in that Vision 200 program, I instructed my teaching assistant at the time (now my CEO) that instead of raising money and bringing that to show to Uganda, we would set up teams and see if we could design our own vehicle and then build it. We did that for about two years through PowerPoint presentations and we went around to communities and told them about our experience building the Vision 200 in Torino. The first vehicle we wanted to produce was to help young people at the university campus to get around. Along the way, the President heard what we were doing and we gave him a presentation. He invited us in 2009 to present our work to the Cabinet and they supported us. Out of that, we wanted to see if we could change the way we were training our students at that time. We wanted to go from the theory side to realizing things in reality and practical training. The President started an initiative to support the activities in the university. Out of that, we produced the first vehicle known as Kiira EV. We wanted to originally produce a mini Makerere electric vehicle but decided instead to go countrywide. We started getting support in 2010 through the budget and were then able to start production. After the President commissioned it, he promised that the government would provide any assistance we needed. Two years later, building on that support, the Kiira EV had a range of only 80 km. To charge it would take about three hours. Today, we now have a hybrid vehicle that is both electric and has an internal combustion engine. I wanted to be able to get to my village that is 500 km away. When you are outside of Kampala, you can zoom along at internal combustion engine speeds. We released it in November 2014 in Kenya. Two years later, we focused on addressing the public transportation system. The majority of people here do not own vehicles. If we were going to have any impact on transportation, we needed to go for public transportation. That is when we came up with the idea of having a bus that would run both on a lithium ion battery and also have solar energy capabilities. In Uganda, we have intense sunlight for 8 hours a day. Could we make a mechanism that could capture this intense sun energy and also store it in batteries for extended range? From that, we came up with a 37-seat bus called Kayoola, which is a local word that means “it clears everything”. From all this, this country started realizing that the automotive industry could be developed here. The next move was to see if what we were doing could be commercialized and moved into the market. With that motivation, I moved into the Cabinet to speak for the commercialization of what we were doing. In 2016, when I came out of the Cabinet, the next thing to do was to put the infrastructure framework that would drive this process of going into the market. Fortunately, the Cabinet approved it in April 2018. In that roadmap, we have a purview up to 2040. By 2030, we should be in the market. Everyone should know that Uganda produces these vehicles, we will market them, and we can export them. There are some other activities going on like assembling the internal combustion engine vehicles. These are mainly personnel who have been working with supply companies, as well as some others who were building bus bodies, and so on. The competition is not quite there yet. When we go in and produce the first cars next year, others may enter the space.

How can you achieve this? What is the next step?

Our plant should be ready by June 2021. Starting next year, we would like to start producing 5,000 cars. This 5,000 will be coming from the first phase of the implementation of the assembly plant.

That roadmap which was approved by the Cabinet in April 2018 envisioned a four-year first phase and the budget for that was approved. The first thing would be to put up the plant where the manufacturing would occur as we develop the other infrastructural aspects and as we sharpen the quality of the vehicles. Because the budget is dependent on the country’s budget and therefore GDP, etc., the pace of funding has been problematic. It is not matching up with the roadmap we had defined for this exercise. If we can identify a potential funder who can come in to help us to keep at a minimum at pace with our roadmap it would be good. We have a lot of raw materials of all types: iron, lithium, cobalt, textiles, etc. in this country. Because our idea in this exercise is to create employment opportunities for our young people, address issues of climate change, and contribute to the country’s GDP in amounts that at the moment are not realizable (we would like to see 30% of our GDP coming in from this industry) we would like potential investors to come in and enhance the supply chain. We have 500 million metric tons of iron ore available. If this could be converted into steel, it would be ready for the automotive industry. We have cobalt, which is linked to copper, which could provide the basis for lithium ion batteries. We have a lot of sand around Lake Victoria and we need that to produce glass for the automotive industry as well as other industries. The oil would provide what we need for our plastics, pharmaceuticals, etc. These are the areas that potential investors should look at and identify where they are best placed to influence the economy. The materials needed to produce our vehicles should be sourced from here as much as possible.

Why should investors come to you? What incentives do you offer?

Firstly, the Ugandan and East African market is already there. We will need 600,000 of these vehicles by 2030. With that market in place, with some of the measures that the government will enact to ensure that the production of these vehicles here are cheap, why wouldn’t they come here? If Toyota, for example, wants the market here, why doesn’t it come and assemble these parts onsite in Jinja? There will be price preferential differences. We have created an environment similar to what was done in Europe and the US. You will find many Toyota, Honda, etc., vehicles in the US. The market and conditions under which they were produced attracted them. The competitiveness in that market was addressed by cheaper vehicles. The other incentive is the availability of these raw materials. Whatever you would need for these vehicles could be gotten from here. By the time you put together the vehicle it would be a lot cheaper. Our tourism industry attracts most people at the moment, but the opportunities are even more sustainable in manufacturing.

Uganda does not have the experience in this industry, though. Does this make the market too risky?

I look at what South Korea and Malaysia did. Malaysia started its engagement with Mitsubishi, which is a Japanese vehicle. South Korea got Daewoo. The same risks that one might worry about are exactly what these two countries went through before they hit the market. We have the competence to address these issues in the same way those countries did. Now, the costs of labor are going up. The next shift in production, unlike previously when it went from the US to China, could be to Africa if we can develop the human capacity, the capability, the quality of work. We can create an environment where the next industrialization will be because of the reduced labor at the same quality. That is why we have been emphasizing the need to churn out graduates that are of international standards. If you can produce the same item both here and in China, but the one in China is more expensive, you would choose Uganda. Studies have shown that Africa and Brazil are where the next wave of industrialization will be. We would like to take advantage of that as we groom this human resource capacity and ready the environment.

Project yourself two to three years’ time, the medium term. What is your vision if everything goes well?

Our plant should be ready by June 2021. Starting next year, we would like to start producing 5,000 cars. This 5,000 will be coming from the first phase of the implementation of the assembly plant. By the time we realize the rest of the infrastructure developments, our goal will be 150,000 vehicles per year by 2030. We are doing this because we estimate that by that time, the East African market will require 600,000 vehicles per year. It will be useful for any investor to be with us because that portion of the market will be available to them.

Do you have a channel to sell these vehicles?

Initially, the government might take a few for itself. For the greater market, there will be a distribution sector that forms. Attendant to the electric vehicles will be electric chargers. Anyone engaged in that space will be well placed to benefit from these electric vehicles. At some point, we might even go into autonomous vehicles, which will require GPS, etc. The potential is huge. We would like to get into discussions with potential investors and we can discuss any potential obstacles with them at the government level.

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