Green transportation is becoming a global trend, and Africa wants to latch on to it. However, Africa’s electric vehicles market is low on financing. So, companies struggle to produce enough vehicles, lower costs, and expand their reach.

There is a slowly growing market for electric vehicles in Africa, from e-buses to electric two-wheelers and three-wheelers. But this growth is uneven among different countries. In Rwanda, Ampersand, an e-bike maker, had a waitlist of over 7,000  customers in Kigali alone as of March 2023. Meanwhile, East Africa’s largest economy, Kenya, has only 2000 e-bikes on the road. The government said it aims to increase that number to 200,000 by the end of 2024. But that still looks like a pipe dream as of today.

The only silver lining is that Roam, a Swedish e-mobility company, opened a plant in Nairobi in July. The plant can reportedly produce 50,000 e-bikes yearly. Notably, Kenya has over 40 EV companies and is considered a regional leader in the space. Uganda’s government took a more daring route by signing a five-year deal with e-bike and battery swapping company Spiro to replace 140,000 internal combustion engine (ICE) bikes with electric bikes.

However, eradicating ICEs won’t come cheap. Most EV facilities are producing below-capacity. Even in Kenya, insufficient investment was cited as the primary reason behind the under-development of local EV manufacturing capabilities in AfEMA’s report. According to another report by the Shell Foundation charity, the continent may spend as much as $9 billion in financing by 2030 to grow a sustainable market for electric two-wheelers in Kenya, Nigeria, Uganda, Rwanda and Ethiopia. And here’s where investors start getting worried: the road to profit is largely unclear.

Cars are a luxury for many African consumers. For instance, not more than 6% of Nigerians own a car. Nigeria’s most recent data on vehicles is from 2018. That year, the National Bureau of Statistics recorded 11.8 million cars in Nigeria. But only 39% of these vehicles belonged to private owners. Yet, Nigeria accounts for 75% of registered vehicles in West Africa.

There are two primary reasons for these low numbers. One is that most residents have low spending power, and the middle class is shrinking. A journal by the DHS Program says only 18% of Nigerians own a fridge. The other is that these countries are largely import-dependent because it’s hard to run these businesses profitably locally. Nigeria has given 54 licenses to carmakers since 2014, permitting them to assemble cars. Twenty-eight assembly plants began operations from these licenses, but only six remain operational and are producing at low capacity due to forex challenges, infrastructure, and capacity gaps.

In countries such as Kenya and Rwanda, the adoption of e-bikes is being driven by asset finance companies such as Watu, Bboxx and M-Kopa, which allow riders to pay in instalments, typically from their earnings as motorcycle taxis or delivery riders. That’s why Chinese companies looking to grow their African revenue are flocking to Morocco, where there’s more room for growth.

However, Morocco is not the only country posing a bright outlook for electric vehicles. Tanzania has more EVs than the rest of East Africa combined, with over 5,000 on the road. And it achieved this feat with only $1 million in capital (Kenya has 50 times more). If more countries had Tanzania’s kind of output, investors would be less averse to EVs in Africa.

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