Uncertainty as funding gaps for Kiira project widen

Monday December 30 2019

The prototype of Kiira Motors green mobility solution at Nakasongola Air Base. PHOTO | FILE | NATION MEDIA GROUP


Timelines for the delivery of the assembly line for Uganda’s Kiira Motors Corporation have become uncertain, with the funding gap now projected to widen to $13.5 million by July 2020.

Now at the midway point, the project that is supposed to see the building and commissioning of a 22,000-square-metre assembly shop in June 2021, has already posted a $7.3 million shortfall in disbursements relative to the budget.

According to Allan Muhumuza, KMC manager for business development, apart from the 2018/19 fiscal year when Ush21.5 billion ($5.8 million) was released against a requirement of Ush24 billion ($6.5 million), the subsequent years have seen sharp cuts in allocations. For example, under the current financial year, less than half of the required Ush44 billion ($12 million) was approved for release. Another Ush43 billion ($11.7 million) was due for release in the 2020/21 fiscal year but only Ush20 billion ($5.4 million) has been provided under the medium term expenditure framework.

“The cumulative funding gap for the first two years now stands at Ush26.5 billion ($7.3 million). It is going to almost double because just like this year, only Ush20 billion has been approved for next year against a requirement of Ush43 billion. That will widen the gap to Ush 49.5 billion ($13.5 million),” said Mr Muhumuza.

Finance Permanent Secretary Keith Muhakanizi, who doubles as secretary to the Treasury, acknowledged the funding shortfalls. But blames them on cash flows that “are not able to support KMC’s full requirements.” He declined to discuss alternative funding mechanisms.

Mr Muhumuza said that while construction will continue, it will not be possible to achieve the milestones within the set time.


“It is these financial releases that informed the roadmap which put us at June 2021 for start of production. Now we shall not achieve the milestones, pushing the start of commercial activities beyond 2021,” he said.

He added that the contractor, the National Enterprise Corporation, is capable of completing the physical works nine months ahead of schedule, to deliver the plant by September 2020, if resources are fast-tracked.

KMC has so far put two of its Kayoola electric buses on the road. The first bus that was assembled in China arrived in the country in September, while the second that was locally assembled by Ugandan technicians hit the road last week. Construction of a third bus will start early next year.