Electric vehicles in Uganda – Prime Time Communications

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#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 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 Rising fuel prices can be countered by electric vehicles

#OutToLunch Rising fuel prices can be countered by electric vehicles By Denis Jjuuko Fuel is the most common word on people’s lips especially in urban areas where motorized transport is the most used form of movement. Rural areas aren’t spared though. Moving produce to urban areas must be a challenge. Usually, trucks that bring produce to the urban areas return with essentials to the rural areas. Life must be tough everywhere.Some fuel stations in Hoima were said to have sold a litre of petrol at more than Shs10,000. I think this is the first time since the 2007 elections in Kenya where supply lines to Uganda were cut off due to the post-election violence that erupted that fuel has cost as much as or more than Shs10,000 a litre. This time though, the result isn’t a violence after an election rather our approach to testing drivers for COVID-19. Truck drivers went on strike than paying what they considered exorbitant rates.In Kampala this week, in the areas where I live, a litre of petrol is going for Shs5,000 and some didn’t even have. At some stations, people end up buying a litre of the premium types at Shs5,190 or more. Some organisations have advised their employees to work from home given the increasing cost of transport. Although the increment in prices has been solely blamed at the strike by drivers, fuel prices have been on the rise steadily climbing towards the Shs5,000 per a litre mark. I believe regardless of the strike, a litre of petrol will be selling at more than Shs5,000 before the end of 2022. Of the 6.5 million litres of fuel sold in Uganda every day, the majority of it is used in vehicles. This makes everything in the country expensive.Yet there are some solutions that can help address this challenge. Electrified transport especially in urban areas can lower the cost of doing business. This would call for the deployment of electric buses in the city. You need less than Shs50,000 to charge a bus for 300km. The cost of running a diesel bus covering the same distance in an urban area like Kampala is almost three times more than an electric one. Operators of public transport would actually make more money if they went electric. I have listened to testimonies by Kampala boda bodas who are switching to fully electric motorcycles. They say they make Shs11,000 more every day using electric motorcycles than when they used to operate ordinary motorcycles. That is when there isn’t even a single incentive from government to use cleaner cheaper motorcycles. Imagine if there were some incentives! How many public transport operators would be using electric vehicles?If enough reliable public buses were deployed in greater Kampala, many of us would abandon our private vehicles as they are costly to operate. Also, most private vehicles carry on average two people and are parked for the greater part of the day. Lack of parking in Kampala is another issue buses would solve. These buses as we have already seen with Kiira Motors can be locally built thereby not only solving the country’s transport nightmare in urban areas but also creating millions of jobs. Besides public transport, the government should offer incentives for people to buy electric and hybrid vehicles. Such incentives should be in lower import duty and other taxes so that we import less internal combustion vehicles that not only increase the cost of doing business but also destroy the environment. Not so long ago, Kampala was listed among the most polluted cities in the world. This is a result of our reliance on extremely old vehicles in a congested city.Incentives for charging infrastructure would then also be provided such as tax rebates for fuel stations, hotels, and shopping malls that install car chargers. More incentives can be provided for school shuttles and companies that transport students and workers respectively in electric buses. Companies can be encouraged to use electric vehicles for their city movement as well. The government can do the same for vehicles that are mainly used for city movement.The Ministry of Energy and Mineral Development would then introduce an electric vehicle tariff similar to the newly introduced cooking tariff. You pay less for electricity for charging your vehicle. As fuel prices rise, given our generation capacity, the cost of electricity should be going down. Today, a big budget of many households in greater Kampala is on transport. Cars are expensive to buy and service and even more expensive to fuel every day. Money saved from transport would boost household incomes leading to more spending in other areas. That is how economies grow. The writer is a communication and visibility consultant. djjuuko@gmail.com

February 9, 2022