Kiira Motors to supply 3,700 electric buses to West Africa

From the newsletter

Ugandan state-owned motor vehicle manufacturer Kiira Motors Corporation has signed a letter of intent to supply more than 3,700 electric buses to West Africa. Kiira’s main plant in Jinja has an annual capacity of 2,500 vehicles. So far 41 buses have been produced by the company, out of which 29 are electric. They are used for public transport in East African cities. 

• While demand for its electric buses is high, Kiira lacks sufficient capital, forcing the company to push its break-even target from 2023 to 2030. Kiira has received government funding of $93 million between 2018 and 2023 but now faces a funding gap of more than $40 million. 

• Should it plug the hole, the export market holds significant potential. Kiira currently relies on domestic sales. The company has previously received orders for its electric buses from Tanzania, Nigeria, Eswatini, and South Africa. 

More details

• Kiira is one of only two electric bus companies in East Africa, with the other being Kenya-based startup BasiGo, which has already expanded to Rwanda. The companies seek to revolutionise mass transportation in the region, which is mainly dominated by vans and buses.   

• “The plant has signed a letter of intent to supply more than 3,700 electric buses to West Africa. Kiira Motors has created 800 jobs and has the potential to generate more than 14,000 direct and indirect productive jobs,” said Ugandan Minister of Finance Matia Kasaija.

• Kiira makes both diesel and electric buses. While the company has the ability to make 2,500 buses annually, it does not utilise its full capacity due to capital constraints. The company,which imports most of its components from China before it assembles them locally, receives funding quarterly from the Ugandan government.

• The company has been seeking to grow its export market, initially targeting neighbouring Tanzania. But the expansion to West Africa will be unique, and poses logistical challenges. Transporting buses from East Africa to West Africa will most likely be done by sea, which could take weeks or months.

• Besides the logistical challenges, Kiira’s buses are likely to be more expensive to West African buyers than those directly imported from major producing countries like China, South Korea, and Japan. BYD is currently a major supplier of electric buses in Africa, often offering lower prices than its competitors.

• Despite these challenges, demand for electric buses is growing fast in Africa as they have proven to be more economical than diesel buses. For instance, BasiGo has received orders for more than 1,000 buses, which it is racing to fulfil. Besides Kenya, Uganda and Rwanda, electric buses are also gaining prominence in South Africa, Nigeria and Egypt. 

Our take

• Kiira Motors urgently needs to bridge its significant funding gap. It should explore a stake sale to a private investor who can inject much-needed capital into the business. The Ugandan government should also provide Kirra with longer-term funding to help the company plan its operations better. 

• While the African Continental Free Trade Area (AfCFTA) will boost intra-African trade, it is still difficult for African countries to trade with each other due to infrastructure and policy hindrances. Kiira should develop a robust and cost-effective logistics strategy to overcome these issues. 

• Kiira should actively pursue collaborations with other African electric mobility players, especially electric bus companies like BasiGo, as well as international technology partners, to share expertise, accelerate R&D, and jointly address shared challenges.