What lies ahead for electric mobility in East Africa

Abel Boreto, Associate Director at Novastar, writes:

The discourse on climate change in Africa has been dominated by resilience and adaptation while less has been said about how Africa can transform the climate threat into an opportunity for its young, urbanizing population.

The electric mobility sector, in particular, presents a massive leapfrog opportunity. With the right investments, partnerships, regulations and technical support, Africa is poised to take a leading role in the sector.

Here’s why:

African countries such as Zimbabwe, Namibia, Mali, DRC, Ghana and Ethiopia are emerging as key global suppliers of minerals such as lithium, copper and cobalt that are critical for manufacturing electric vehicle batteries.

Africa is not beholden to the legacy Internal Combustion Engine (ICE) vehicle industry, lobbyists, and outdated technologies.

Africa has demonstrated that it can leapfrog outdated technologies such as fixed-line telephony, grid power connectivity and traditional finance, jumping straight to mobile telephony, decentralized power solutions and mobile banking.

Below, I take a closer look at the electric mobility sector in East Africa and the opportunities it presents:

What is the state of electric mobility in East Africa?

East Africa, particularly Kenya, is home to the largest and most vibrant electric mobility ecosystem in Africa. There are over 50 electric mobility startups in East Africa ranging from electric motorcycles, buses, bikes, mopeds, boats, trucks and vans.

East Africa has a reliable and clean energy infrastructure and a friendly regulatory and operating environment that supports the growth of the sector. Unsurprisingly, East Africa is home to Africa’s most funded electric mobility startups including OX Delivers in Rwanda (raised $15M+), BasiGo in Kenya (raised $10M+), Ampersand in Rwanda (raised $15M+), Roam in Kenya (raised $7.5M+), Arc Ride in Kenya (raised $5M+) and Zembo in Uganda (raised $3.5M+) from local and global investors.

Governments such as Rwanda’s and Kenya’s, oil and gas companies such as Shell, TotalEnergies and Rubis, and financial institutions such as Watu Credit, Mogo, NCBA, KCB Bank, MKOPA, BBOXX and Family Bank are increasingly interested to partner with electric mobility startups.

What are the emerging trends in the electric mobility space?

Electric mobility startups in East Africa have embraced partnerships with incumbents such as oil and gas companies, vehicle asset financiers and Original Equipment Manufacturers (OEMs) to fast-track their growth. For instance, Ampersand has partnered with BBOXX and TotalEnergies; BasiGo has partnered with AVA, BYD, National Bank, Family Bank and KCB Bank; Arc Ride has partnered with Musashi, Watu Credit and C&G; Roam has partnered with MKOPA; Stima Mobility has partnered with Rubis, Mogo and One Electric.

Governments through regulators, such as the Energy and Petroleum Regulatory Authority (EPRA), and utilities, such as Kenya Power and KENGEN, are extending support to boost the sector. EPRA recently adopted a discounted electricity tariff for the electric mobility sector, while Kenya Power and KENGEN are setting up charging stations nationwide. In Rwanda, the government has rolled out tax incentives and policies to encourage the uptake of electric vehicles.

Electric mobility startups in East Africa are ramping up local vehicle assembly plans to take advantage of the tax incentives attached to local assembly of vehicles. These startups are either partnering with existing local vehicle assemblers such as AVA or building their own local assembling plants as is the case with Roam, Ampersand and Arc Ride.

What are some challenges facing the electric mobility sector in East Africa?

Electric mobility startups in East Africa are currently capital-intensive and asset-heavy given the lack of existing infrastructure to support the asset-light deployment of electric vehicles e.g. charging stations or battery swapping stations or local assembling plants for electric vehicles.

There is also limited consumer awareness of the advantages of electric vehicles. A common view is that electric vehicles are untested, with concerns about durability, reliability, range and second-hand value.

The slowdown in the fundraising environment globally and the limited operating and financial track records of electric mobility startups in the region make it difficult for many startups in the space to raise adequate capital for growth.

Electric mobility startups in the region (excluding Rwanda) grapple with high import duties on fully built electric vehicles which make imported electric vehicles very expensive and uncompetitive compared to ICE vehicles.

What is needed to accelerate the adoption of electric mobility in East Africa?

There is a need for concessional funding, guarantee facilities and technical assistance support to enable the de-risking and refining of business models and the building of capacity and track record to attract growth capital.

Importantly, governments in the region need to adopt regulations, policies and tax incentives that encourage the adoption of electric mobility and attract additional investments into the sector. These initiatives include:

Reduced import duties and sales VAT on electric vehicles;

Subsidised electricity tariffs (time of use tariff provisions to take advantage of excess power generated and not used);

Standardization of the charging/battery swapping infrastructure (adoption of a unified charging/battery swapping standard to eliminate duplicity);

Ban or restrictions on second-hand ICE vehicle imports in the near/long term.

How has Novastar helped accelerate the adoption of electric mobility in East Africa?

Novastar has backed BasiGo, the Kenya-based electric bus company transforming Africa’s public bus transport sector by making it affordable and convenient to own and operate electric buses. BasiGo’s solution entails bespoke electric bus design, local assembling and an innovative battery subscription model that includes the provision of reliable charging infrastructure, service and maintenance.

BasiGo is accelerating the adoption of electric buses in Africa and is helping to reduce carbon emissions, health issues caused by air pollution and improve air quality.

In summary:

Over the last three years, I have observed the rapid pace of growth, innovation, investment and customer adoption in the electric mobility sector in East Africa.

BasiGo and others are showcasing the advantages of electric vehicles — transforming the African transport sector, creating new industries and job opportunities and reducing carbon emissions. To learn more about Novastar’s partnership with BasiGo, visit our website here.