A topical Enlit Africa session addressed whether the evolution of the electric motorbike market is the start of the electric vehicle (EV) revolution in Africa. Here follow insights on financing, policy, and the link between electric mobility (e-mobility) and energy access.
Rapid rural to urban migration coupled with limited public transportation and dependence on fossil fuels for mobility has increased congestion and poor air quality in most African metropolitan cities. According to the Changing Transport Organisation, hosted by the GIZ, between 2000 and 2016, sub-Saharan Africa experienced a 75% increase in emissions, with transport emissions increasing by 153% in Ghana, 73% in Kenya and 16% in Nigeria.
Driven by health and environmental concerns and the need to reduce dependency on oil imports, e-mobility is gaining prominence across the continent’s public and private sectors. There has been a particular expansion on the continent in the e-mobility space of bikes and trikes, from boda-bodas to motorcycle taxi drives; some see motorbikes as a tool to pushstart Africa onto the e-mobility stage.
Championing an ecosystem approach is needed in tackling the mobility agenda because it’s not just about the mobility solution. This holistic approach must unpack the broader ecosystem alongside the government to create an enabling environment through policies, regulations, and standards. Also, government working alongside industry, from international original equipment manufacturers down to small- and medium-sized enterprises and startups, will create the opportunity to enter the market and take up future opportunities. Electric mobility, sustainable energy, and renewable energy are opportunities for Africa to advance the energy ecosystem and mobility within this space.
Unlike other continents, Africa has very low ownership of individual, private transportation, which puts it in a much better position to transition to e-mobility than many developed regions. This situation is because the behavioural change needed is much less. After all, shared mobility has always played a significant role on the continent and shared mobility will continue in the future.
Bikes and trikes in East Africa
Motorcycles can be seen as the lowest hanging fruit to push-start the rise of e-mobility. In East Africa, there is a large group of very cost-conscious customers clocking up anywhere between 100 and 230km per day. There is a confluence of that intense energy usage, where drivers are spending more money a year on fuel than on any other expense.
There have been considerable investments in energy generation in the same region, to the point where there’s a substantial grid electricity surplus. So, mobility advancements right now, particularly in East Africa, would not put enormous demands on the grid. The East African market is also unique in that a lot of the traditional modes of public transport are two-wheelers and motorcycles.
Parallels between cellphone uptake and EVs
The uptake of mobile phones and digitalisation in Africa has been impressive. Mobile money and digitisation have also created a favourable business ecosystem for all the older parts of the value chain. The opportunity now exists for boda-boda riders to pay for their bikes on loan using mobile money.
The market includes fintech startups launching some innovative businesses and offerings for insurance. There are also ride-hailing services widespread in Kenya, where you can order a ride with a bodaboda quickly from anywhere in Nairobi. These services make the transition to electric motorbikes easier.
When the technology is ready to be adopted, it can scale up very fast due to economic reasons because it makes sense for businesses. Evidence of this business savvy mindfulness is that nowhere in the world has the adoption of mobile money been as swift as in Africa.
Financing e-mobility in Africa
There are about 115,000 motorbike taxis in the Rwandan market that would need to be replaced by 2026. Replacement would cost about $100 million in working capital; two thirds of that would be debt and one-third equity. It is anticipated that debt would be made up of three to five-year loans and, to a lesser extent, loan guarantees and rotators. For the East African region working off an estimated 25 million motorbikes by 2030, the figure comes to around $2-3 billion.
The annual spend on fuel alone for five million motorbikes would amount to approximately $6-8 billion a year. Therefore, $2-3 billion working capital is needed to capture the market over the next nine years. Still, up to $6-8 billion a year in returns is what the investment would look like for potential investors.
The capital is not so much for the infrastructure, but more the battery packs, and to a lesser extent, working capital for vehicles. In terms of infrastructure, the smallest stations built can cover their costs for around $5,000, a fraction of what it costs to build a conventional fuel station.
Enabling policy for the motorbike sector
Kenya doesn’t have specific support schemes for electric motorbikes, and registration is mostly for petrol motorbikes. That needs to be rectified to promote ease of access into the micro-mobility space. In Rwanda, the electricity tariff is the number one influencer on commercial viability and scalability of e-mobility, so the role of government policies is essential.
Rwanda had an effective electricity tariff, including VAT of around 30 cents per kilowatt-hour. Still, recently the government enacted a whole suite of policy incentives, the most important being reducing electricity tariffs. There’s an electric vehicle tariff, pegged to the large industrial tariffs and just under 10 cents. From 30 cents to under 10 cents is a big dif ference for the uptake of electric motorbikes. Policies matter In South Africa’s case, the green transport strategy released in 2018 is a key pillar to decarbonise the transport sector. However, mainly centred around passenger vehicles, there is no dedica ted policy that speaks to motorbikes. Therefore, in South Africa, there are no direct incentives for electric motorcycles.
As such, Africa does face a challenge in adapting to changing mobility; African leaders also need to be mindful of the opportunities and make sure that policies, regulations, and standards don’t hinder the adoption of technologies. We need to ensure that these environments are not inhibitive of the available technologies because that is what will move Africa forward, both on energy and mobility.
Mobility linked to energy
When looking at the power requirements for an electric motorcycle, you are not looking at the exact power requirements as a passenger car or bus. With electric motorbikes, a standard single-phase or three-phase connection can be used. It makes sense for larger fuelling stations to be situated next to a utility transformer or a dedicated transformer, which means stations will be next to a medium voltage line.
There may come a time when the uptake of electric motorbikes will overtake the capability of the current infrastructure, and that needs to be addressed. The existing network needs to be scaled up now to meet growing demand.
The revolution for electric mobility in Africa will not start with expensive electric vehicles but rather affordable solutions that champion equitable access to energy and mobility. The market must not downplay the role that is going to be played by micro-mobility. The uptake of e-mobility vehicles – two-wheelers, the light-duty three-wheelers, and possibly even the light-duty four-wheelers – can increase electricity connections by adding microgrids to the mix, thereby providing energy access to communities. Micromobility in Africa will play a role in tackling emissions, affordability, and the challenges that we see from energy access.
Watch the on-demand session on Enlit Africa-Connect with Emile Fulcheri from Stima Mobility in Kenya, Hiten Parmar from the uYilo eMobility Programme in South Africa and Joshua Whale from Ampersand in Rwanda.