The Ugandan government has reinstated a 25% import duty on electric vehicles (EVs), reversing a previous policy that had exempted them from the tax. This move is part of a broader strategy to incentivize local manufacturing of EVs and reduce the country’s reliance on imported vehicles.
The reintroduction of the import duty has already had a noticeable impact on the price of imported EVs. For instance, the cost of the popular Nissan Leaf has increased by over USh 51 million ($13,750) due to the new tax. This price hike could deter potential EV buyers and slow down the adoption of electric mobility in the country.
However, the government believes that this measure is necessary to foster the growth of a domestic EV industry. To support this goal, local manufacturers that meet specific criteria, such as employing at least 80% Ugandan workers and sing a significant proportion of locally sourced raw materials, will be exempt from the import duty.
This exemption aims to attract investments in EV manufacturing, battery production, and charging infrastructure development, ultimately creating jobs and boosting the local economy. By promoting local production, Uganda hopes to become a regional hub for electric mobility and contribute to a more sustainable transportation sector.
While the increased cost of imported EVs may pose a challenge in the short term, the government’s long-term vision is to create a thriving EV ecosystem in Uganda. This includes not only manufacturing vehicles but also developing the necessary infrastructure and supporting services to facilitate widespread adoption of EVs.
The success of this policy will depend on various factors, including the government’s ability to attract investments in the EV sector, the willingness of consumers to adopt EVs despite the higher upfront costs, and the availability of affordable financing options.
Uganda’s decision to reinstate the import duty on EVs is a bold move aimed at promoting local production and reducing reliance on imports. While the immediate impact on EV adoption may be negative, the long-term benefits of this policy could be significant for the country’s economy and environment.
