Kiira Motors Corporation, Uganda’s automotive startup is racing to have two-thirds if its vehicle parts and components produced locally by 2030, as the commercial production date nears. This translates into roughly 19,500 of the 30,000 typical vehicle parts.
The production plant in Jinja is 85 percent complete and commercial production is expected to start in January 2022, with an initial target of 5,000 vehicles a year. The first delivery of 300 buses for Kampala mass transit system operator Tondeka Metro will follow a month later.
On August 14, President Yoweri Museveni presided over a foundation laying ceremony at the plant, where the company revealed details of the planned production run and progressive localisation of the supply chain. The company officials also reported a $40 million funding gap, and that it locally sources slightly over 100 items used in the building process. So far, they have built three buses with another three due to roll out of the temporary assembly facilities in Nakasongola.
Although localisation forms part of the national automotive development policy, the steep climb for Kiira Motors, comes on the back of an executive order by President Museveni stopping the importation of sub-assemblies or wholly-built buses and trucks into the country.
“There will be no more whole built buses and no more assembling because that is the policy we have taken,” said President Museveni adding, “We now want fabrication where you may import some parts but locally fabricate others such as the body parts which can be made here.”
Importation of used vehicles will also be banned the moment local manufacture of sedans and other vehicle models starts President Museveni said. He added that importation of fully built vehicles exposed African consumers to unnecessarily higher prices for vehicles because of the expensive lifestyle in source countries.
According to Kiira Motors chief executive Paul Isaac Musasizi, the production facilities will be ready by December and plans to produce 1,020 buses, 50 of them electric, by June 2022. The project will need annual capitalisation of $3.4 million for the first three years after which it will become cash positive in the fourth year.
The goal of 65 percent localisation will be achieved in two major steps starting with about 28 percent in 2026. That represents about the entire 5.4 tonne of the steel structure which accounts for 30 percent of the Kayoola electric bus structure.
“Some of these parts such as body parts and wiring harnesses are not rocket science. Working together in multi-sectoral approach we envisage a competitive and sustainable, indigenous motor vehicle industry producing 0.5 million vehicles a year by 2030,” Musasizi said.
Kiira Motors has already engaged Uganda cables to supply the wiring harnesses while Uganda Batteries Ltd is primed for manufacture of the high-density batteries for the electric buses.
Besides the private market, Kiira Motors is asking for an off-take agreement with the government to supply a quarter of the 1,200 SUV units that the government buys every year. The company is also exploring the possibility of local contract manufacturing of pick-up trucks for Mitsubishi.