Kiira Motors Corporation is grappling with a $40 million funding gap, potentially delaying the delivery of 100 electric buses ordered by various African countries, including Tanzania, South Africa, Nigeria, and Eswatini. Finance Minister Matia Kasaija disclosed that the project has been hampered by persistent underfunding since 2018, affecting Uganda’s ability to meet demand for these eco-friendly vehicles.
Currently, Uganda is the sole manufacturer of electric buses on the continent, but production capacity remains insufficient to meet the needs of African economies aiming to reduce carbon emissions. So far, Kiira Motors has produced 39 buses, 27 of which are electric and 12 are low-emission diesel combustion vehicles. Budget constraints have also hindered the development of essential infrastructure, such as truck body manufacturing, vehicle painting, and powertrain production.
Kiira Motors’ Executive Chairman, Tickodri-Togboa, expressed doubts about fulfilling the 100-bus order without increased financial support from the government and private sector investment. CEO Paul Isaac Musasizi emphasized the need for $140.6 million to finance the corporation’s five-year business plan, presented to Parliament in March. This investment would cover the construction and equipping of the Kiira Vehicle Plant, procurement of parts and materials, human capital development, business growth, and operating expenses.
The heavy capital investment is critical to achieving an annual production capacity of 2,500 vehicles at the Jinja Industrial Park, located 80km east of Kampala. The initial project plan aimed to roll out buses by mid-2021, followed by light to medium-duty trucks and pickups in 2022, and SUVs by 2025. Executive sedans would be produced on order under a low-volume production model.
KMC anticipates that the capital investment will create 600 jobs, up from the current 168 positions across various departments, including engineering, production, marketing, sales, finance, and administration. However, experts warn that continued underfunding will delay the launch of auxiliary industries in Uganda, such as lithium processing for electric car batteries. Uganda’s lithium deposits in Ntugamo, a border district with Rwanda, have attracted investor interest for potential mining and battery production.
In December, President Yoweri Museveni met with investors from a London-based firm interested in mining Ugandan lithium. Currently, Uganda imports batteries, increasing manufacturing costs and final vehicle prices. President Museveni is also courting South African investors, leveraging South Africa’s significant automotive manufacturing capabilities.
South Africa plans to produce its first electric vehicle (EV) by 2026 as part of its Just Energy Transition (JET) plan, which requires an estimated $6.84 billion investment from 2023 to 2027 for the transport sector to contribute to decarbonization. South Africa’s robust automotive industry, hosting brands like Toyota, Isuzu, Volkswagen, and Mercedes, integrates components globally and exports to over 150 countries.
Tanzania represents a crucial market for Kiira Motors due to improvements in its public transport system, notably the Dar es Salaam Bus Rapid Transit (Dart) project. This initiative aims to enhance public transportation with dedicated bus lanes, stations, and terminals. While Tanzania’s electric vehicle industry is underdeveloped, the market for electric two and three-wheelers is growing, with an estimated 5,000 such vehicles on its roads according to the E-Mobility Alliance 2023 report.
Kiira Motors’ funding challenges and strategic partnerships underscore the need for sustainable investment to advance Africa’s transition to clean energy and bolster economic development through innovation in transportation.
