Government under the visionary leadership of H.E. President Yoweri Kaguta Museveni has taken definitive steps towards building a robust, competitive, and sustainable Mobility Industrial Value Chain in Uganda. The prioritization of the Mobility Industrial Value Chain is in cognizance that it provides an unprecedented opportunity for harnessing the nation’s population dividend in promoting value addition to Uganda’s mineral and other natural resources with the view of import substitution and export promotion of vehicles, parts, components, systems, and mobility engineering services.
The Mobility Industry Value Chain comprises a diverse ecosystem supporting upstream, midstream, and downstream industries (See illustration of the Mobility Industry Value Chain on page 8):
MOBILITY INDUSTRY VALUE CHAIN
The goal is 500,000 vehicles produced annually with 65% localization by 2030 coupled with the establishment of efficient, integrated, sustainable, safe and inclusive public transport system(s) while promoting environmentally friendly transport solutions. Value addition in the nascent Mobility Industry in Uganda will be achieved through Technology Transfer, Contract Manufacturing and Supply Chain Localization. This strategic intervention is poised to contribute to the industrialization agenda envisaged to aid the transformation of Uganda into an upper-middle-income economy by 2040.
Long-term technology partnership(s) are imperative to build core capabilities to Develop, Make, and Sell motor vehicles and components in Africa. The Strategic Technology Partnership(s) are premised on 4+1 pillars of People, Plant, Products, Mobility Infrastructure and Policy founded on strategies developed and shaped by the realities and characteristics of the target market in Uganda and Africa. The sustainability of the Mobility Industrial Value Chain in Uganda is premised on optimal utilisation of infrastructure, facilities and resources seasoned with relevant application of Industry 4.0+ tools and technologies within the context of a green and circular economy.
The Global Automotive Industry is a multi-billion-dollar industry globally with an average annual turnover estimated at approximately USD 5.3 trillion corresponding to 6.23% of world GDP in 2017 with production at 97 Million motor vehicles annually. The global automotive market is projected to grow to USD 9 Trillion with 109 Million motor vehicles produced annually by 2030.
The study by Africa Development Bank established that the Africa Motor vehicle market stood at 1.2 Million Vehicles in 2017 projecting the market to experience tremendous growth reaching 10 Million vehicles annually by 2030.
The East African Community (EAC) passenger and commercial vehicle market has grown steadily from 158,000 in 2011 to 257,000 in 2015 and is projected to reach over 629,000 units by 2032. Motorcycles are projected to grow at a CAGR of 5% in the same period to over 1,000,000 units by 2032.
In Uganda, Road Transport accounts for 95% of passenger traffic and 96.5% of the freight cargo. The Uganda vehicle import value grew to over USD 550 million per annum at a compound annual growth rate of 11.8% representing approximately 10% of the national gross import value. For the same period, vehicles were the second highest valued imported goods after petroleum products. The motorization rate (i.e. number of vehicles per 1000 persons) for Uganda is 14, below 44 for Africa, 174 global average and 200 for developing countries.
Motor vehicle imports in Uganda are predominantly Fully Built Units 85% used at an average of 16 years at first registration and 65% of vehicles imported are passenger vehicles. Growth of the passenger vehicle sales is attributed to the rise of the middle class in the prevailing weak public transport system. Significant import of FBUs and used vehicles has led to a high trade deficit. Government purchases of Motor Vehicles averaged at 1,629 units in the period 2010 to 2018, 70% of these being Pickups. This presents an opportune market for domestic products specifically Pick-ups and SUVs, which are the most commonly, purchased vehicles by the government.
The absence of a well-structured and sustainable public transportation system has resulted in heavy traffic and road congestion, especially in Kampala City. Traffic and road congestion in major cities results in loss of 24,000 person-hours daily equivalent to UGX 3.2 trillion annually. This is on the backdrop of UGX 500 million worth of extra expense on fuel daily due to traffic congestion in Kampala City alone.
It is also imperative to note that the importation of end-of-life vehicle technology has resulted into low fuel efficiency and high hazardous transport-based carbon emissions contributing to climate change. The average fuel efficiency in Uganda as of 2014 was 13.7L/100km with 500g/km transport-based carbon emissions. The United Nations Economic Commission for Europe set the target for transport-based carbon emissions for 2016 – 2021 at 130g/km for passenger vehicles and 175g/km for light commercial vehicles resulting into a measured average fuel efficiency of 5.1L/100km and 7.2L/100km respectively in 2016. Kampala is ranked 2nd most polluted city in Africa and top 15 globally. The economic costs of climate change in Africa could equal an annual loss in GDP of 1.5% – 3.0% by 2030 under a business-as-usual scenario due to noncompliance. This points to the need for a shift to high volume public transport vehicles along with a clear roadmap for progressive transition to a fully electric bus transit system to address the issues of congestion, pollution and energy economy.
Uganda has the lowest number of tractors at 0.4 tractors per 1,000 hectares while Kenya and Tanzania are at 2.7 and 1.5 respectively. It takes sixty days to cultivate a hectare of land using a hand hoe, compared to three days with draught animal power while a sound tractor can plough five hectares in a day. The Food and Agricultural Organization (FAO) recommended Tractor: Arable Land ratio is 1:40 hectares. This implies that Uganda needs 172,500 tractors to maximize its potential.
MECHANIZATION MEANS TIMELIER OPERATIONS, AND MINIMAL LOSSES.
Cheap, substandard, defective and counterfeit auto parts and components have infiltrated and dominated the local vehicle spare parts market. Vehicle owners, drivers, and technicians are often unable to distinguish between genuine and counterfeit parts. Counterfeit and substandard auto-parts result into high vehicle downtime, road accidents, compromised productivity and loss of revenue. They undermine innovation and impair the reputation of genuine auto parts and components brands.
Vehicle owners, drivers, and fleet managers often rely on unskilled and semi-skilled (‘juakali’) spare parts suppliers and vehicle maintenance & service providers. This has resulted into high vehicle downtime, road accidents and loss of revenue. Higher Institutions of Learning have paid limited attention to courses for developing the human resource required by the motor vehicle industry. Most programs that exist are in technical institutes focusing on vehicle maintenance and repair. Skilled labour across the entire automotive industry value chain is a critical input in driving industrialization. The lack of skills and professionalism has led to limited appreciation and application of industry standards leading to low quality of services and products. Subsequently, the auto parts sector has continued to witness an unregulated influx of counterfeit spare parts.
According to the International Energy Agency’s Global Electric Vehicles (EV) Outlook 2020, the global EV stock (excluding two/three-wheelers) in is expected to expand from 8 million in 2019 to 50 million by 2025 and close to 140 million vehicles by 2030, corresponding to an annual average growth rate close to 30% and about 7% of the global vehicle fleet by 2030. In this scenario, global EV sales will reach almost 14 million in 2025 and 25 million vehicles in 2030, representing respectively 10% and 16% of all road vehicle sales. By 2030, the light-duty vehicle fleet (cars and light commercial vehicles) represents the largest part of the fleet of electric four-wheelers, regardless the scenario. The global electric commercial vehicle market size shall reach approximately 2,026,000 units by 2028 from an estimated 129,000 units in 2020, a 15-fold increase, growing at a CAGR of 41.1%. The electric bus holds the largest volume share of the global electric commercial vehicle market and shall remain predominant in terms of volume up to 2025.
Global Automotive Original Equipment Manufacturers (OEMs) have adopted the use of sustainable advanced manufacturing tools and processes, dubbed the Fourth Industrial Revolution, in their manufacturing processes to streamline work streams, increase productivity, safety & quality and to reduce waste. The major categories of the Industry 4.0+ for adoption in the automotive industry include Autonomous Robots to improve quality, safety & productivity; Integrated Computational Materials Engineering (ICME) to support product optimization and prototyping; Digital Manufacturing; Industrial Internet & Flexible Automation to streamline communication and work steps; and Additive Manufacturing or 3D Printing, which eliminates expensive tools and equipment and reduces waste.
Government is committed to working with the Private Sector, Academia and Development Partners to ensure that as many parts of the Bus, Trucks, Pick Ups, SUVS, 2-3 Wheelers, Tractors e.t.c. are made locally by our scientists, MSMES, and artisans. This is projected to create over 300 factories manufacturing 65% of the required vehicle parts locally by 2030 and employing over 100, 000 people. Government will institutionalise programs to skill and perfect the skills of our artisans (in katwe e.t.c) to manufacture vehicle parts even for export transforming them from subsistence into manufacturing, ICT and services sectors and hence into the money economy.
By Paul Isaac Musasizi
Chief Executive Officer, Kiira Motors Corporation
Chairperson, National Mobility Think Tank, ST&I-Office of the President