electric and hybrid vehicles

Out to Lunch

Out to Lunch: Giga factories could provide solutions to Africa’s job challenges

By Denis Jjuuko There used to be a TV series on the National Geographic channel that showed some of the biggest or busiest things in the world. From the busiest hotel in the world, train station to the airport. Imagine a hotel with 7,000 rooms, fully booked and all the guests eating breakfast at almost the same time or within a few hours. And then meals have to be prepared for a similar number as well as walk in clients. Think of an airport that handles more than 250,000 passengers a day. The same TV program also had a segment on mega factories sitting on hundreds of acres of land with thousands of employees producing some of the famous brands we know today. These series were some of the most fascinating things one can watch. A single factory as big as some of the suburbs of Kampala. If you are a regular reader of this column, you may have noticed my fascination with manufacturing. I think most countries develop by manufacturing stuff even though some have done so through financial services and being trading outposts. But the majority, it is manufacturing that creates the jobs and propels economic transformation. The United States, the world’s biggest economy, is desperate to have the factories back from China and elsewhere. Germany, Europe’s biggest economy, is known for manufacturing. Japan is also known for the same. Without mega factories in China, the majority of Chinese would be unemployed. Manufacturing creates sustainable decent jobs where the majority of people can work. It doesn’t require sophistication for workers to get things done because what the majority of factory workers do is repetitive. Within a few days on the job, a worker can easily be trained to press a button or fix something before the product goes to the next person on the line even for the most sophisticated products. Africa plays a decimal role in manufacturing relying on other countries to do so. A report by McKinsey says that Africa will need to create 18 million jobs a year to absorb the growing labour force until about 2035. Payment apps and all sorts of apps built around the Airbnb and Uber models that are attracting lots of funding from angel investors won’t be the only solution for Africa’s development. In fact, the majority of those apps are collapsing because they were surviving on capital being raised from Silicon Valley without enough customer base to sustain them. They should have known that unemployed people have no money to transact through the payment apps and are too broke to order for food on delivery apps. One of the things Africa can do is to build factories. They don’t have to be mega though like those in the TV series. We could build giga ones instead and get the continent ready for the battery market in preparation for a transition from fossils to electrification of mobility. Oil, as a scarce resource, made the countries where it was discovered wealthy. Countries couldn’t just manufacture oil. They had to drill it in the wells where it was discovered in commercially viable quantities. The world relied on them and they could sometimes refuse to pump or pumped more than required. As electric vehicles become the norm, those who will have invested in giga factories will become as important as the Arabs have been with their oil. Unlike oil which couldn’t be found anywhere in sufficient commercial quantities, anyone can build batteries and electrification components if they focused on them. There are more electric boda bodas in Kampala than ever and people have started importing electric and hybrid vehicles given that this financial year there is no import duty charged on such vehicles. The countries that are developing this capacity today won’t pass on the knowledge to Africans. The continent will continue to organize conferences sponsored by the west to talk and talk about the imbalance between the north and south and issue communiques after communiques like it has been the case for more than 60 years now. Nobody will transfer knowledge to the continent because some technocrats attended a conference and talked about it. Many of the raw materials required to make the batteries are here. What is required is to build our intellectual property to play a part in this industry. Building the giga factories on the continent will not only create sustainable decent jobs but also enable vertical integration of automotive and mobility businesses and wean Africa off its reliance on global supply chains that can easily be disrupted by geopolitical maneuvers or pandemics like we saw in 2020. The writer is a communication and visibility consultant. djjuuko@gmail.com

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Out to Lunch

#OutToLunch: Investment ideas to fulfill your 2024 resolutions

By Denis Jjuuko This week sees the end of the festive holiday period almost for every organisation especially those in the private and development sectors. Like every new year, many people come up with resolutions, committing themselves to what they would like to achieve. For many, making more money tops the list. Money, makes the world go round or so we are told. If making money is one of your resolutions, here are some ideas: Trading in FMCGs: There is a saying that cashflow is king. If you want to make money in 2024, you may have to look at businesses with a lot of cashflow. Trading is one such business. You can buy stuff in the morning and have them sold by the evening. This is common in the sector known as fast moving consumer goods or FMCGs. Almost everybody or household uses them every single day. Such goods may include sugar, soap, cooking oil, wheat, bread, and packaged drinks (soda, water, beer, juices etc.). Fuel (petrol and diesel) are considered as FMCGs too. There are so many other goods in this category just like you see in the supermarket or retail shop near you. Because they are highly consumable, they provide good returns to those who trade in them. The margins per item is small but the secret here is in the volumes. Traders earn about Shs500 or so per a carton of soda or bottled water but the numbers they can sell a day can be huge. A small trader doing just 1,000 cartons a day would be able to earn a gross income of half a million shillings. In a six-day week, that would be Shs3m or approximately Shs12m a month. Treasury bonds and bills/unit trusts: There is an increasing interest in treasury bonds and bills as well as unit trusts. Unlike trading, these are hustle free investment options. You simply walk into your commercial bank with a minimum of Shs100,000 and start investing in bonds and bills. Insurance companies and investment companies regulated by the Uganda Capital Markets Authority offer unit trust investment opportunities some of as little as Shs10,000. Bonds, bills and unit trusts offer returns of about 10% annually. If passive income is your thing, this is where to invest. If you reinvest the interest, in a few years, you can significantly see huge returns due to the power of compound interest. Real estate: There are some people who are running away from real estate especially rentals to invest in the hustle free treasury bonds and bills and unit trusts, which means there is a gap that is increasing in real estate rentals especially for the lower and middle income categories. Already, statistics from Habitat for Humanity Uganda indicate that the country’s housing deficit stands at 2.4 million housing units. As Uganda continues to urbanize, there will be an increasing demand for houses for especially young people who are doing their first or second jobs. Houses that are affordable for the lower and middle income earners will continue to be in demand for years. The investment here is also not so high and can be done incrementally over a long period of time. Besides rentals for this population segment, land banking and selling and buying are still other income generation and saving options. Motor vehicle spare parts: If you live and work in the greater Kampala metropolitan area, you know the state of the roads in the country. Each vehicle you see on the road is a potential client. Given the state of the roads, car breakdowns are going to be the norm rather than the exception. The lack of an efficient public transport system and the culture of owning a motor vehicle considered as a yardstick of success will see an ever-increasing number of vehicles on the road. Most of these vehicles come in old from Japan and the state of the roads will ensure frequent breakdowns. Roads take time to be built even when money is available, making investing in motor vehicle spare parts a worthwhile venture. Electric mobility: A trending photo this week was of Tesla car being offloaded from a car carrier somewhere in Uganda. Teslas are fully electric vehicles. Many development partners and blue-chip companies have started electrifying their fleets. This is a result of URA removing import duty on electric and hybrid vehicles this financial year. Kiira Motors’s vehicle plant is nearing completion with the installation of the assembly lines, paint shops and testing facilities ongoing in Jinja. But we don’t have enough mechanics and technical people to maintain these electric vehicles. We don’t even have enough well-trained electric bus drivers. The electric mobility value chain has great potential for those looking for investment opportunities this year. Personal health: Apart from making money, many people resolve to do something about their health every new year. They perhaps understand that you can only make money if you are alive and healthy. Personal health is already an industry worth of billions of dollars globally. As the country urbanizes and a few people get out of poverty, they will always be willing to spend on their personal health making it an area with potential returns for investors. The writer is a communication and visibility consultant. djjuuko@gmail.com

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