July 2023 – Prime Time Communications

Out to Lunch

#OutToLunch Extend import duty exemption on electric vehicles and hybrids to assembling parts

#OutToLunch Extend import duty exemption on electric vehicles and hybrids to assembling parts By Denis Jjuuko Taxes paid upon importation of vehicles in Uganda have largely been assessed based on the year of manufacture, engine size of the vehicle, and sometimes the type of vehicle. A tractor, for example, pays less import duty than a luxurious saloon car. A tractor is used for production whereas a saloon car is for ‘eating life.’ What hasn’t been clear is how much tax one would pay if they imported an electric or even hybrid vehicle. Electric vehicles use batteries which are charged from time to time while hybrids may use both internal combustion engines and batteries. Electric vehicles have no engine capacity as they use none so they can’t be assessed based on engine size. May be based on battery size? But that isn’t clear as well. With the new tax amendments that are to be enforced from July 1 as Uganda began yet another financial year is that electric vehicles (EVs) and hybrids won’t have to pay any import duty. The same applies to motorcycles. The rationale behind this is to “promote electric vehicles and reduce pollution” according to the document issued by the Uganda Revenue Authority (URA). Kampala is one of the most polluted cities in the world due largely to old vehicles that we import into the country. We also have narrow roads and lack an effective public transport system thereby leading to heavy traffic jams during peak hours. Also, because a car is a status symbol in Uganda, whoever gets some ka-money or qualifies for a loan, the first thing they think about is a car. They call it literally walking while seated! Many times, the car the majority of these people can afford is about 15 years old and at the end of its life journey. Such cars are heavy polluters of the environment. It is, therefore, commendable that the Ministry of Finance saw it fit to scrap import duty on EVs and hybrids. The world is moving in that direction and electric mobility is the talk everywhere. We are at the cusp of the most significant change in mobility in more than a century even though EVs existed long before internal combustion engines. So if Ugandans embrace EVs and hybrids, new businesses will be created with entrepreneurs investing in charging systems and infrastructure, hopefully at the same level they have done with fuel stations that exist everywhere you turn. Repair and maintenance shops will be set up and even driving schools. Technical schools and universities teaching motor vehicle engineering and such other courses should start paying more attention to EVs and hybrids and the whole electric mobility value chain. Young people seeking careers should do the same too to prepare themselves for a period of complete EV domination. Africa should stop exporting our minerals as raw materials rather as complete products that are geared at enabling electric mobility. We can export automotive glass instead of silica. We can process the rare minerals instead of sending them as raw materials. More than 60 years after independence, we can’t still be doing the same things we did back then. Otherwise, nothing will change. If we only think of importing, we can’t provide the jobs young people need to live meaningful lives. That is why even though I am generally happy with the tax amendment that scraps import duty on EVs and hybrids, it still an incentive to import rather than make in Uganda. So if I import an EV or hybrid vehicle made in Japan or Germany, I would not pay import duty. By importing that car, I would have denied young people jobs and even more money through taxes to the government. The tax amendment should have included knockdown parts required for assembling or manufacturing vehicles here. The government of Uganda buys about 2,000 vehicles every year. If just 1,000 were made or assembled here, we would significantly create jobs and build our capacity and within a few years be able to export to the region. The regional market for cars is almost a million units annually. But car makers won’t be able to do it unless they are forced. If incentives are given for importing, that is what they will do. That defeats Uganda’s aspirations as enshrined in the 2040 Vision and even the president’s swansong of import substitution. You substitute importation by making here and that is where we need to focus. The writer is a communication and visibility consultant. djjuuko@gmail.com

July 5, 2023

Out to Lunch

#OutToLunch African leaders must solve maize disputes before negotiating peace for Ukraine and Russia

By Denis Jjuuko Six African presidents or their representatives flew to Ukraine and Russia allegedly to broker peace. Russia invaded Ukraine more than a year ago plunging Europe into another war. They indeed met the leaders of the warring parties but not before some embarrassing moment. The South African president’s security detail and media were stranded in Warsaw when the Polish authorities kept them on the plane for more than 24 hours after landing. An uncalled-for embarrassing moment for Africa’s third biggest economy. If the Poles couldn’t allow security and media to get off their plane for a day, what kind of influence does Cyril Ramaphosa and his counterparts have to negotiate a peaceful agreement with Vladimir Putin? In the high stakes global war that is Russia and Ukraine, it is inconceivable that African leaders could negotiate peace. Perhaps they had gone on holiday. While the six leaders were in Russia being serenaded by Putin’s charm and their delegations enjoying the eastern Europe weather, unknown assailants attacked a secondary school in western Uganda and killed 42 children, seriously wounded many and abducted others. Authorities blamed the Allied Democratic Forces (ADF) and some people fighting over the meagre funds supplied by Canadian donors to the school. The eastern part of the Democratic Republic of Congo has never known peace. Foreign armies, private militias, rebel groups and even international peacekeepers call this area home. Thousands of people lucky to survive being killed in this endless crisis have ended up in internally displaced people’s camps or as refugees in neighbouring countries or elsewhere. To access Europe, many African leaders avoided the burning airspace of Sudan fearing that their Gulf Stream private jets could be shot down by anti-aircraft missiles that could be fired at any time. Sudan is the epicenter of a senseless war where two erstwhile friends couldn’t agree on who how to share power or steal the country’s resources. It is hard to believe that many Sudanese have fled to Chad, of all places, for safety. Chad can’t govern itself. The president of Senegal who came to power through a peaceful democratic process now doesn’t want to leave leading to demonstrations where security forces killed more than 16 protesters. In Somalia, Al Shabab filmed themselves as they attacked the Ugandan peace keepers, killing more than 50 of them. In Mozambique, it is the Rwanda army maintaining peace in some parts of the country. Libya has been at war since the Arab spring. In Nigeria, Africa’s largest economy, Boko Haram abducts school going children without anyone stopping them. As the African leaders were talking peace to the Russians and Ukrainians, thousands of Africans were being boarded on rickety boats to cross into Europe. Many don’t make the journey as their overloaded boats capsize. Many of these people don’t want to go to Europe but they have been forced to seek refuge elsewhere. There are no jobs on the continent. You hardly hear African leaders meeting to discuss concrete steps they can take to create real jobs to help their young populations lead meaningful lives. A year ago, some African leaders flew to Europe to beg Russia to allow ships carrying food to leave Ukraine ports. Africa, the continent that considers itself an agricultural one can’t feed its own people. It is Ukraine at war that can ship in food. With the current lack of commitment to agriculture, Africa will be importing food worth USD100 billion annually by 2030 according to the African Development Bank. With a population of 1.4 billion, food imports are expected to significantly rise. With every kilo of food imported, a few jobs are lost. These are the people who will be lured to slaughter innocent kids in dormitories in Kasese. Talking of food, in East Africa, Kenya and Tanzania aren’t allowing each other to import or export maize leading to a long convoy of trucks at the Namanga border. Uganda and Kenya consistently blub over milk and eggs. Tanzania and Uganda squabble periodically over rice. As these non-tariff barriers are being set to deny or delay the movement of food, millions in East Africa starve to death. African leaders can’t sit together to solve these problems. Once in a while, they fly to Addis, get booked into their presidential suites, drive down to the African Union headquarters and give wonderful long speeches. A communique is circulated with deadlines and timelines that everyone knows won’t be met. After they fly to their countries where a party of dancers and a queue of the most potbellied military officers is organized on the airport tarmac to welcome them back. And the circle continues. When will Africa stop joking and get serious? How can people think that they can negotiate peace for Russia and Ukraine when they can’t solve a small border dispute over the importation of powdered milk? The writer is a communication and visibility consultant. djjuuko@gmail.com

July 5, 2023

Out to Lunch

#OutToLunch What Uganda’s CEOs can learn from Boda Bodas

By Denis Jjuuko Last week, two companies with operations in the country organised a small event that largely went unnoticed. At the event, the chief executive of the telecom company received a fully electric car from a car dealer. The telecom has joined a few other organizations in Uganda that are starting to green their mobility. A few hotels and recreation centres have been operating fully electric golf carts for a while but like the news event mentioned above, they are largely unnoticed. Does this signal the future of fully electric cars in Uganda? Perhaps it is a starting point. If you believe in symbolism. The telecom may be testing the depth of the river at least with one foot. If plans go well, we could see the company transitioning to green mobility. Already, telecom masts are being powered by solar thereby reducing their carbon footprint. But getting into cars is a big step forward that could make a significant impact on the economy. If companies go into fully electric vehicles, they will reduce their reliance on fossil fuels but also significantly reduce the cost of doing business. Most importantly, fully electric vehicles need the charging infrastructure and professionals to work on them. Mechanics will have to upgrade their skills and so are drivers. Ugandans will have to overcome the fear of the unknown. So electric vehicles will require us to plan our trips better. In many western countries, deadlines have been set for the transition to electric vehicles. Many are looking at 2030 as a deadline to shift to these technologies. Forwarding looking companies are not waiting for 2030 or whatever deadline Africa will set (most likely internal combustion engines will just become obsolete) and then start scrapping around for electric cars. They are starting now to manage the transition so that by the time internal combustion engines become outdated, they are already in a position of strength. The government needs to do the same by starting to switch to electric vehicles so that it isn’t caught up in a race against time to electrify its fleet. I believe that at one stage, aid (or is it called budget support nowadays?) will be tagged on how electrified the government fleet is. For about three years, the Uganda Civil Aviation Authority used Kiira Motors’ electric buses transporting its staff between Entebbe and Namboole. The buses were fine. Can’t this be piloted all over Kampala? Yet unbelievable as it may sound, the boda boda industry is shoulders above everyone when it comes to electric mobility. Some entrepreneurs have been turning boda bodas into electric ones and have set up battery exchange centres in many parts of Kampala. What can we learn from the bodas? Uganda entrepreneurs who love setting up fuel stations should be looking at this sector. If telecoms, religious and development organisations are starting to buy fully electric vehicles, who is going to repair and maintain them? Outside their offices, where will they charge from? Who will drive them? Is the Uganda National Road Authority working on roads with electric vehicles in mind? Because of batteries, electric vehicles are heavier than other vehicles which may put a strain on road infrastructure if the transition isn’t planned well. When we discovered oil, our universities rushed to start oil and gas academic programmes. I am not sure how far they are on electric mobility MBAs. Yet the mobility sector is huge in terms of creating and sustaining jobs. Mobility is a big driver of economic growth. As we learn from Bodas and a few forward-thinking organisations, the United States, European Union, and China are positioning themselves for a war on batteries for electric vehicles. The US is providing incentives for battery makers that are unsettling the European Union and China. Meanwhile, China which has built significant capacity in this sector, has acquired more than 40 percent of cobalt in the Democratic Republic of Congo (DRC). Cobalt is very crucial in making batteries. Africa has a lot of minerals that are crucial for the automotive industry but we are net importers. As other countries are positioning themselves to take advantage of electric mobility, we are busy giving our minerals away. We are happy to claim that industrialization isn’t our comparative advantage. How did China gain this comparative advantage? They only became serious about 45 years ago. We claim that agriculture is our thing but we go to Russia to beg to allow Ukraine, a country at war, to feed us. Africa again is giving away its resources for others to develop. We have an abundance of rare earth minerals in Busoga yet the region is one of the poorest in the country. We should be dominating electric vehicles and we still have a small window to do so. The writer is a communication and visibility consultant. djjuuko@gmail.com

July 5, 2023

Out to Lunch

#OutToLunch Why children shouldn’t be part of your retirement plan

By Denis Jjuuko For every 100 police officers that retire from the force every year, six die by suicide according to a report attributed to a doctor within the police force. Many of these officers, according to the report, once they are asked to “go home”, they realize they have nowhere to go. Going home is euphemism for retirement. So the Police is now conducting mental health clinics to sensitize their officers. Perhaps, it will help reduce this unwanted number. To be honest, retirement isn’t a problem limited to police officers. Many people struggle to cope once retired and unable to earn any meaningful income. Many others may not die by suicide but lack of a sustainable income accelerates their death. The children, once a retirement plan for many parents, are struggling to sustain themselves. So, parents in retirement are left at the mercy of the children. That is why those policemen kill themselves. But we only talk about them because they are easy to track. The number of retirees dying by suicide may be higher and perhaps we need to track them to find a solution. The solution largely lies with the workers themselves. At university or institutions from where we graduate to employment, we are taught all sorts of things but nobody tells students that planning for retirement starts the day they graduate or find a job. It is easier to save little money over a long period of time than saving huge sums for a short period of time. If you start saving at 25 years old, you won’t have to save as much as somebody who is starting to do so in their 40s. This is because if you start saving at 25 and you retire at 60, that is 35 years of saving. The guy who starts at 40, only has 20 years to save. That would require a significant sum than the guy who starts at 25. I understand that most people earn so little and it is easier for people to say that they can’t save but the thing about life is that most people are capable of adjusting once the road gets tough. The issue is how to do it before the road gets tough and probably impassable. Children are the biggest cost to most parents and indeed many people claim that they spend all their lives educating children and therefore left with nothing. Paying school fees is the biggest hurdle most parents face. If school fees is the biggest challenge most adult Ugandans face, how about producing fewer children or those we can ably look after? But if you move across the country, you see children giving birth to children! A policeman sharing a uniport with several families should be on family planning and not giving birth with reckless abandon! It is important that parents enroll their kids into schools they can afford. There was a story sometime back of a parent an international school took to court for defaulting on fees. Why take a child to a school that you can’t afford? Children, if raised well and get some form of education, they will be fine. In fact, children will have to teach themselves a lot of stuff if they are to survive in this century. A good school is great if you can afford it but there is no need to be indebted to the bone so that Junior can be friends with a minister or an ambassador’s son. Rent is the other issue most people talk about as an impediment to saving for retirement. Indeed, failure to own a house was mentioned by the police doctor as a leading cause of death by suicide by the retired police officers. Again, if one has fewer children, they might afford to build themselves a comfortable home that they can use for retirement. But if you are feeding 10 kids at every meal, it will be difficult to save. Remember, this is Africa. There will always be some other children you are looking after or supporting once in a while. I often see young people especially the so-called corporate class failing to build yet they are earning some income. They don’t want to live anywhere beyond Najjeera claiming it is far to buy in Mpigi, Mukono or Ziroobwe. Yet Najjeera was unlivable by the previous corporate types because it was far. By the time they wake up to acquire land in Ziroobwe, it will be unaffordable and they will now be grappling with school fees and servicing car loans. So, if you don’t want to die by suicide a few years after retirement, you have got to save today. Have as few children as you can look after and plan in time where you will live during retirement so that when you are asked to “go home”, you don’t instead look for a rope and the tallest tree to end your life. The writer is a communication and visibility consultant. djjuuko@gmail.com

July 5, 2023