Introduction

Governments, automotive manufacturers, energy companies, charging infrastructure operators, mobility service providers, technology providers and aggregators across the globe are preparing themselves for a rapid transition from conventional internal combustion engine (ICE) vehicles to electric mobility[1].

It is estimated that the global transport as a sector contributes to about 25% of all energy related greenhouse gas (GHG) emissions. In Kenya, this is even higher – at 50% - with motorcycles being a large proportion of this as they typically produce 10x more hydrocarbon emissions per km than cars[2]. As such, the use case for e-mobility as a suitable replacement for internal combustion engines is more appealing at such a time where critical infrastructure such as battery technologies, and solar PV are competitive to the legacy fossil driven alternatives in the market. With a rapidly growing population coupled with accelerating urbanization, the world is projected to have 75% of its population  living in urban regions by 2050; and with studies showing that outdoor air pollution causes 3.2 million in deaths annually across the globe, it is easy to appreciate that  incorporating clean energy particularly in the transportation sector is not only an economic “nice-to-have” option but rather a life and death affair. Clean tech innovations through a number of variations of Electric Vehicles (EVs) and its accompanying infrastructure have been seen across U.S., Asia and Europe.

 East Africa

Source: BasiGo’s recently launched 100% electric buses into PSV operations in Nairobi City, Kenya. https://twitter.com/gmulaimu

East Africa too has seen its fair share of E-mobility activities -  There are several startups involved in local assembly, engine conversion, establishment of charging infrastructure and some regional governments endeavoring to encourage EVs in public transport by advertising for their procurement for BRT corridors. Rwanda for instance, has welcomed plans of electric vehicle assembly plant in its Gahanga Industrial Zone while Ampersand is deploying swapping stations in Kigali City. In Uganda, Zembo, an e-mobility start up  provides low cost motorcycles and battery–as-a-service for motorcycle taxi drivers. Similarly, Kiira Motors is assembling E-buses for Ugandan public transport. In Kenya, estimates are that there are 582 electric and 582 solar powered vehicles in the country and rapidly growing. Nevertheless, this traction is uninspiring given what is doable. This is due to the market barriers which we infer as building blocks needed to scale the EV sector.

Key Building Blocks to grow the EV Sector in East Africa?

International experience indicates that the key factors responsible for driving this transition are a) conducive policy and regulatory support across the electric mobility value chain, b) technological advancements (new and improved battery chemistries, automation in retail electricity business) and c) increased customer preference for green mobility options (influenced by rising fuel prices and concerns regarding local air pollution, climate change)[1].

Below are my thoughts on what interventions could enhance more uptake of EVs in the East Africa region:

• Patient Capital: E-mobility requires different capital pools to scale its operations (see fig below). For instance, the vehicles may require an asset financing approach while the charging infrastructure (the key contribution to range anxiety concerns) may require long term capital. For instance, regional governments can provide public capital for the charging infrastructure. This is given that such assets require high density as an incentive to encourage transition from internal combustion modes to e-mobility. Some of the private players that have raised commercial financing include; Asobo, an e-boat solution provider in Lake Victoria that received funding from Persistent Energy Capital; EkoRent, whose e-taxi brand NOPEA received funding from InfraCo Africa among others. These examples in East Africa, though encouraging is just a drop in the ocean compared to the scale of financing needed to drive e-mobility growth in East Africa.

Below are some of the financing schemes that have been used in other markets;

Source: UNEP

• Enabling Policy: Policy is a key enabler for e-mobility. For instance, there is need to have a clear EV charging tariff so that private players understand price in the level of return they expect and bake that into their risk-return models. Enabling policy can also be triggered by supply side incentives such as tax exemptions & lowering duty for e-mobility imports. Kenya and Rwanda have initiated such incentive schemes (e.g. lower duty levies) as part of their push for decarbonizing transportation. India has also seen state governments such as New Delhi collaborate with private sector to make commitments towards e-mobility. For instance, leading the way are manufacturers such as Tata Motors that is seeking to decarbonize its supply chain/logistics. Markets that are comparable to East Africa have explored carbon credits and tax credits as policy mechanisms, with varying levels of success. Looking at Kenya’s neighbor, Rwanda, has a number of policy recommendations  which Kenya can also borrow from.

 The key interventions highlighted included;

• The need to establish a wider vision of the future of sustainable urban mobility. Note: This also includes incorporating non-motorized transport such as walking and cycling into urban planning.
• The need to identify viable market segments of early EV adopters.
• Applying a combination of fiscal and non-fiscal incentives to increase e-mobility in the early stage.
• The importance of developing standards, regulations and planning for charging infrastructure, recycling of batteries, parking and data sharing.
• Adopting an ecosystem-based perspective for collaborative governance and midcourse correction.

The figure below presents interactions amongst different layers of the E-mobility ecosystem

Source: IGC Policy Brief (Rwanda)

• Business Model Innovation: Some examples of business model innovation include the use PAYGO financing models for e-vehicles especially two wheelers and three wheelers which are a common means of transport for the urban, peri-urban and rural poor. Similarly, battery as a service option is an emerging innovation that has been explored by companies such as Ampersand; this further lowers the overall cost of acquisition for the bike since it eliminates the battery cost from the asset financing. While it remains to be seen which usage and acquisition models will scale, such innovations will definitely find space to fill in the expansive market place often with price sensitive customers.

Source: Ampersand

Source: Persistent Energy Capital’s comparison between ICE-2W & e-2W with regards to daily fuel spend for the end user and how this translates to cost savings under a lease to own model

• Consumer Education: Indian Industrialist Ratan Tata once said that, “The mind of the consumer is blank”, and you just have to fill their minds with the right information to allow willingness and buying decisions. The knowledge gap remains wide hence support is needed towards activities around research, capacity building and knowledge sharing in order to lower the information asymmetry between consumers, and other market actors[1]. For instance, knowledge campaigns can support stakeholders to build synergies between current policy instruments and those under development. An example could be how to optimize e-mobility interventions within current frameworks such as the National Climate Change Action Plan (NCCAP), the Kenya National Energy Efficiency and Conservation Strategy (NEECS) among others

Conclusion

As we have seen; patient capital, enabling policy and business model innovation remain critical growth pillars. These require an all hands-on deck approach with both private sector (innovators), end-users, governments and development partners playing their complementary roles in growing the ecosystem. However, despite the current international push towards SSA countries to dedicate efforts towards e-mobility, we must define our paths and growth trajectory different from developed markets. This might be through a focus on two wheelers and three wheelers first and urban public transport.

Wanjohi Theuri is a Climate and Clean Energy Advisor based in Nairobi. Additional contribution by Louise Mathu, Shelmith Theuri, Khatuchi Khasandi and Daniel Kitwa.

Sources: The World Bank; Persistent Energy Capital, Intellecap & P4G, Government of Kenya