[ACCI-CAVIE] To accelerate the shift to e-mobility, emerging economies must use a comprehensive strategy to confront barriers to electric vehicle adoption.
Most Kenyans hop on the back of a motorbike taxi, known locally as a boda-boda, to get around town. With 22 million rides per day, it’s a sector that provides an estimated 1 million direct jobs for drivers. A cheaper, faster mode of transportation that can dodge traffic and access hard-to-reach areas, motorbike ridership in Kenya is expected to triple by 2030. However, these bikes are 10 times more polluting than cars, deteriorating air quality and threatening people’s health.
The good news is both the government and private sector in Kenya are making a serious effort to transform Kenya’s transportation sector, wherein electric motorcycles can provide a zero-emission alternative to high-polluting vehicles such as boda-boda taxis. Their approach, which has been widely successful, can serve as a model for other countries looking to improve people’s health and lower emissions from their vehicles.
However, while making electric mobility (e-mobility) transitions, emerging economies must confront the barriers to electric vehicle (EV) adoption. These include the high upfront costs of EVs, even though they are cheaper over the long run because of lower fuel and maintenance costs, concerns about the range of the battery charge and lack of charging infrastructure. Financiers are often hesitant to invest in e-mobility in these countries, because of concerns about financing new technology without proven experience for battery life and asset resale value, as well as the lack of bankable projects. Moreover, countries need to ensure EVs are linked to a grid powered by renewable energy, or EVs risk intensifying environmental burdens.
Partnering for Green Growth and the Global Goals 2030 (P4G), a platform accelerating green business models, is working with Kenya’s government and private sector to address these barriers. By funding and refining innovative solutions such as the ones noted below, it can contribute to the financial and technical infrastructure needed to attract investment and achieve a just e-mobility transition.
Laying the groundwork for viability
The Accelerating E-Mobility Solutions for Social Change partnership looked at ways to reduce risks for companies and government financing EVs in rural areas. Led by Siemens Stiftung, this partnership conducted studies on how blended finance, which uses public development funds to mobilize private sector investment in emerging markets, can be structured to develop the e-mobility sector in Africa. It collaborated with e-bike manufacturers to demonstrate how to source local e-bikes and build charging infrastructure.
Testing innovative models to build a pipeline of bankable projects
With demonstrated market viability and a roadmap for building e-mobility infrastructure, Kenya began deploying solutions.
The upfront cost of e-bikes is too expensive for most Kenyans. The average internal combustion engine two-wheeler costs $1,300, while a comparable electric motorcycle costs $1,800. PayGo for E-Bikes, a partnership led by M-KOPA and Shell Foundation, is offering digital pay-as-you-go (PayGo) technology for 1,000 drivers to switch to electric bikes so they can avoid high upfront costs while saving money on fuel costs. The project is also installing 100 PayGo charging stations based on existing ride patterns — a key consideration to make the transition easier for drivers.
But what about drivers who don’t want to wait while their bike is charging? ChargeUp!, a project with ARC Ride, Fika Mobility and Energy 4 Impact, offers a complementary model — a network of 45 stations that offer convenient battery swaps. By proving the commercial viability of the Battery as a Service (BaaS) model, the partnership helps e-bike drivers quickly switch out their low battery for a fully charged one, reducing operational costs and range anxiety, which is when riders lack confidence in the battery’s ability to last the distance they need to drive each day.
Kenya is also ensuring this is a just e-mobility transition. Recognizing the unique challenges faced by women who drive and ride motorbike taxis, including safety concerns and gender bias, PayGo for E-bikes is conducting research and supporting modified models, so the solutions are designed by and for women. To be truly local solutions, the projects need to stimulate the local economy. These projects install chargers at small and medium enterprises to support job growth and explore domestic manufacturing options both in rural and urban areas. There needs to be capacity building and funding support to nurture a range of local and innovative solutions that can develop into a robust investable pipeline to usher an e-mobility transition.
Assembling a comprehensive approach
The above solutions, while promising, still represent a piecemeal approach — countries need a comprehensive strategy to achieve the e-mobility transition. A comprehensive strategy should support each key actor and step in the e-mobility ecosystem: financing programs to help de-risk and lower the upfront costs of e-bikes and incentivize local manufacturing, tariff and policy reforms for charging infrastructure and safety standards and skills training for mechanics and riders.
That’s why government ministries, nonprofits and private sector alliances are working together to develop a comprehensive e-mobility program with the NAMA Facility to accelerate the market for EVs in Kenya. The project would provide $16.5 million to incentivize and de-risk investments in e-bikes and local manufacturing and assembly. The project would also support e-mobility policy and tariff reforms and technical assistance with the goal of achieving 15 percent of annual vehicle sales being electric and 80 percent local assembly of electric vehicles by 2028. By proving the process works in Kenya, this approach can also help guide other countries who are beginning the electric mobility journey.
Locally led transportation solutions can benefit people and the economy
The lack of an enabling regulatory environment and funding for effective business models remain barriers for emerging economies such as Kenya. Fortunately, there are solutions — such as those mentioned above — that can open the market and drive investment into the country.
This is a gap P4G is working to fill — funding and accelerating early-stage business models along with targeted policy interventions to support a country’s climate priorities. With the government working in partnership with the private sector, this approach enables greater stability and confidence for increased development finance and private investment. P4G is also collaborating with development finance institutions to help these models become investable and get access to capital to become financially sustainable and deliver long-term impact.
In Kenya, this approach can help transform the transportation system to be more affordable, equitable and clean. Because electric mobility will likely be a priority issue at the U.N. Climate Change Conference (COP27) in Egypt this November, Kenya’s approach can serve as a model for a just and systematic transition. To speed up this shift, we need donor countries and development finance institutions to get on board and invest in these solutions that build countries’ local markets for green growth.
By Leila Yim Surratt, Sarbinder Singh & Aklilu Fikresilassie