Was it a wise decision of the Uganda government to go into vehicle making?
Frequently the Uganda Government refers to the economy of the country as growing; not developing. It is quick to cite changes upwards in the Gross Domestic Product (GDP), which only refers to the accumulation and movement of goods and services, not factoring the people in its equation.
By Oweyegha-Afunaduula
There was a time in the 1960s when the economy of Uganda was doing much better than the economies of countries that came to be known as the Asian Tigers (that is, Thailand, Singapore, South Korea, Hong Kong). South Korea sent a delegation to Kampala to learn how exactly the Ugandan economic miracle proceeded. This was despite the fact that the Asian Tigers had started on their industrialization path by 1950.
By the time the Asian Tigers arrived in the 1990s, they had overtaken Uganda in economic growth and development by far because of the country’s chaotic sociopolitical path marked by military coups and the five-year bush war of Tibuhaburwa Museveni’s National Resistance Movement/Army (NRM/A). It was as if the bush war was launched to destroy any growth, development, transformation and progress recorded in Uganda since colonial times for interests that had nothing to do with the country’s craving for growth, development, transformation and progress.
The cooperative movement, which had played a critical role in building the economy and empowering the citizens, both economically and financially, was virtually erased from the face of the Earth and its financial wealth and infrastructure grabbed by the combatants. The combatants went to ransack the industries of Jinja, and even, reportedly, transferred some equipment to Rwanda.
This was not surprising because NRA was over-Infested with Rwandese Tutsi elements most of whom had escaped from refugee camps in Uganda to join the militarised outfit. They had interest to use Uganda’s financial and environmental resources to go back to their country. They found Yoweri Museveni’s craving for power in Uganda a pathway for them to realize their own objective for power in Rwanda. It is, therefore, an overstatement to suggest they joined NRA to libereate Ugandans from Ugandans.
In the wake of NRA’s vandalisation Uganda’s economy, there was almost nothing left to call a Ugandan asset. Individual assets became more important than national assets. Assets such as hotels that had survived the vandalisation were sold to individual combatants, families and/or relatives of the combatants or some Indian businessmen at peanuts.
Effectively, Uganda was brought to its knees while the Asian Tigers moved ahead. By the beginning of the 21st Century, the Asian Tigers had developed into high income economies, producing all types of goods and services and in high tech businesses. Meanwhile Uganda was in a deep abyss of underdevelopment, either importing the manufactured, including electric equipment, or secondhand goods from Asia, including clothing and vehicles.
Despite this cruel reality, President Tibuhaburwa Museveni has consistently and persistently told Ugandans that Uganda had become a mid-income country during his reign although it is still doubtful if the country has emerged out of the abyss of underdevelopment. Aaccording to the International Monetary Fund (IMF), cited in The Observer’s article “IMF: Uganda is still a low-income country” of 7 May 2025, Uganda still is a low income country.
Frequently the Uganda Government refers to the economy of the country as growing; not developing. It is quick to cite changes upwards in the Gross Domestic Product (GDP), which only refers to the accumulation and movement of goods and services, not factoring the people in its equation. Apparently, as the GDP figures have been impressively rising, the quality of life for the majority of Ugandans, particularly in the rural areas, has been plummeting to worrying levels.
While there are suggestions that achieving improved growth rates and structural transformation will require a rapid rate of export growth and economic diversification, as well as increase of productivity in various sectors of the economy, mainly agriculture, through improved inputs and food processing, President Tibuhaburwa Museveni has chosen:
(1) Giving money bonanzas to select, usually partisan, individuals, through the Parish Development Model (PDM), Myooga and Operation Wealth Creation (OWC), which are together siphons off billions of shillings, ostensibly to create wealth among Ugandans, but is ending in the pockets or bank accounts of corrupt government officials..
- Placing all industrialization efforts in the hands of foreigners ( mainly Indians, Chinese and some Rwandese Tutsis connected to some individuals in government).
No one will doubt that many industries have sprang up to replace those destroyed during the bush war or sold to the combatants and foreigners.. However, the c persistent question is: “To what extent are the industries benefiting Uganda and Ugandans?. It is true that there being no minimum wage, having been removed by President Tibuhaburwa Museveni, ostensibly to create cheap labour for investors, many Ugandans are working more or less like slaves and dying off large numbers because of poverty, unable to access health facilities, which may lack adequate medicines and medical staff.bexause the State priotises militarisation and politics.
Foreign investors are not only given public money as start up capital, but they are also given 10-year tax holidays and allowed to repatriate all the profits they make to their countries of origin, while local investors are totally ignored, overtaxed or else exposed to multiple taxation .
In this article “Was it Wise for Uganda Uganda to go into Vehicle Making?”, I want to explore what benefits Uganda and Ugandans are reaping or going to reap from the Jinja-based Vehicle Assembly plant or enterprise. Ugandans, generally believe the country is manufacturing vehicles ( buses and cars). Let me ask these questions:
- Is Uganda manufacturing or assembling vehicles?.
- Does Uganda have a vehicle assembly plant or Vehicle manufacturing plant?
- Is the vehicle making activity draining or revitalizing the economy?
Some history is important towards answering these questions.The Uganda government partnered with Streit Group, a global armored vehicle manufacturer, to establish an armored vehicle manufacturing and assembly plant in Nakasongola. This partnership aims to produce vehicles for Uganda’s military, police, VIPs, and regional requirements, promoting technology transfer and local capacity building. Additionally, the State-owned Kiira Motors Corporation (KMC) partnered with a Chinese firm, Hi-Tech Group Corporation (HTGC) to make buses and other vehicles at the Jinja-based vehicle assembly plant in Uganda.
The Uganda Government is the primary funder of the vehicle making enterprise in Jinja through the state-owned KMC. The government invested nearly UgX 335 billion ( US$ 89 million) from 2018-2023. The government holds 96% ownership of the enterprise through KMC, and the rest is held by Makerere University. For the 2024/2025 KMC wanted UgX 166.64 billion but the government approved only UgX 32.5 billion.
With the widening funding gap, the meteoric decline in the productive capacity of the country and spiraling borrowing spree of government from both foreign and domestic money markets, it is likely the project may emerge as yet another white elephant one.
A white elephant project is a phrase used in reference to a financial endeavour , which fails to live up to its expectations, or a project whose cost , particularly that if maintenance, is out of proportion to its usefulness.
This then make the question “Was it a wise decision of Uganda to go into vehicle making?” An enduring question demanding intensive debate. However, in Uganda debate is almost dead. We are treated to decision-making by one person: President Tibuhaburwa Museveni.
The Uganda government’s decision to venture into vehicle making has sparked debate among citizens and industry experts. To understand the implications of this move, it’s essential to distinguish between a vehicle assembly plant and a vehicle manufacturing plant.
Vehicle Assembly Plant vs. Vehicle Manufacturing Plant:
Definition A facility where imported vehicle parts are assembled into complete vehicles. A facility where vehicles are built from scratch, with most parts produced in-house.
Level of Local Content Typically low, with most parts imported. Higher, with more parts produced locally.
Technology Transfer Limited, as assembly is often done using imported technology. Significant, as local engineers and technicians are trained to produce vehicles.
Job Creation Fewer jobs created, mostly in assembly and quality control. More jobs created, in various stages of production, from design to manufacturing.
Economic Impact Limited, as most profits go to foreign companies. Higher, as more value is added locally, contributing to GDP growth.
In Uganda’s case, the government has partnered with a foreign company to establish a vehicle assembly plant. While this move may provide some benefits, such as creating jobs and introducing new technology, it’s crucial to consider the long-term implications.
Challenges and Opportunities:
– The plant relies heavily on imported parts, which may lead to foreign exchange losses and vulnerability to global market fluctuations.
– Limited technology transfer and local content may hinder the development of Uganda’s automotive industry.
– The government may be subsidizing the venture, which could divert resources from other critical sectors, such as healthcare and education.
– The plant may create employment opportunities, but the number of jobs created may be limited compared to other industries.
To make the venture successful, the government should focus on:
– Increasing local content and sourcing parts from local suppliers.
– Investing in skills development and training for Ugandan engineers and technicians.
– Encouraging technology transfer and collaboration with local universities and research institutions.
– Ensuring transparency and accountability in the management of the plant.
Ultimately, whether the decision to venture into vehicle making was wise depends on the government’s priorities and the terms of the partnership. If the focus is on creating jobs and stimulating economic growth, the government should ensure that the venture benefits Ugandans and contributes to the country’s long-term development.
Prof. Oweyegha-Afunaduula is a Conservation Biologist and member of Center for Critical Thinking and Alternative Analysis
