Eight years after companies among them Ampersand Energy started the e-mobility transition in Rwanda, the country announced that starting in 2025, Kigali, which is teeming with upwards of 26,000 moto-taxis, will stop registering petrol motorcycles and only register electric motorcycles. Bans represent added regulatory momentum on top of traditional EV incentives witnessed in other African countries, including Ghana, Uganda, Malawi, and Zambia, towards supply-side mandates.
Bans are part of supply-side mandates
Supply-side mandates represent a proactive regulatory approach focusing on the production or sales end of the market, compelling manufacturers to produce a certain percentage of zero-emission vehicles (ZEVs). Bans represent the extreme end of the mandate. In the United States, for example, California put in a ZEV mandate that demands an increasing percentage of electric vehicle sales, aiming for 35% by 2026 and 100% by 2035. Other states like New York and Massachusetts have followed suit with similar goals. According to the California Air Resources Board, by 2022, over 700,000 electric vehicles had been sold in California, resulting in an overall electric vehicle penetration rate of 18% by that year. However, unlike Rwanda and Ethiopia, no U.S. state has yet escalated its commitment to outright banning traditional internal combustion vehicles.
EV incentives in Africa lack supply-side mandates
Ghana has implemented an 8-year waiver on import duties for electric vehicles (EVs) used in public transportation, including buses and passenger vans. While this waiver is a significant step, it excludes fully built electric cars for personal use. Additionally, locally assembled EVs and those imported for public transport benefit from a zero VAT rate. The government is also exploring tax exemptions on components and conversion kits for EVs, further encouraging the transition from internal combustion engines. The country, however, still allows the importation of new and used internal combustion engine (ICE) vehicles with a 10-year age limit.
Malawi has removed import duties on electric vehicles, eliminated excise taxes on electric motorcycles, and offered specific rebates to promote their adoption. The government has also waived import duties and taxes on materials for building EV charging stations to support the necessary infrastructure. In contrast, Malawi allows importing used ICE vehicles with no age limit.
In Zambia, the government has introduced a comprehensive 100% waiver on import duty and value-added tax (VAT) for imported or locally assembled EVs. There’s also a reduction in excise duty from 30% to 25% for hybrid vehicles intended for passenger transport. Customs duties for electric motorcycles, buses, trucks, and related accessories have been removed. Like Malawi, Zambia has NO age limit on importing used ICE vehicles.
Uganda has removed the 18% VAT on electric vehicles. EV manufacturers and importers benefit from stamp duty and income tax exemptions. Additionally, the government has implemented excise duty exemptions for electric vehicles and removed import duties for electric motorcycles, four-wheelers, and hybrid vehicles. Uganda allows the importation of used ICE vehicles with a 15-year age limit.
Meeting the new demand for EVs
Countries implementing bans on traditional fuel vehicles must quickly bolster local markets with a wide range of product options, ensuring reliable power sources and increasing the share of renewable energy. Although these bans may be introduced before markets are fully prepared, we can anticipate a surge in the variety of available electric vehicle (EV) models.
Rwanda has made significant strides in improving its energy access and boosting its renewable energy capacity. The country’s installed power generation capacity jumped from 213 MW in 2018 to around 556 MW by 2023. Hydropower alone accounts for about 48% of Rwanda’s energy mix, complemented by a growing emphasis on solar and methane-to-power projects as a diversification strategy.
Electricity access has also seen notable improvements; the percentage of households connected to electricity increased from 70% by the end of 2018 to 71.9% by June 2023. These figures include grid and off-grid connections, with ongoing efforts to achieve universal access by 2024. Additionally, the System Average Interruption Duration Index has improved significantly, dropping from 31 hours in 2018 to just 14.42 hours in 2023—a remarkable reduction of approximately 53.6% in the average duration of outages.
To thrive in this evolving landscape, Rwanda must enhance financing options through microfinance initiatives and traditional banking systems. Microfinance can be a significant boon for the market, providing accessible funding that empowers local entrepreneurs. However, consumer credit may remain prohibitively expensive without accelerating the development of traditional banking infrastructure.
Focusing on local value addition for assembly and manufacturing is crucial for boosting job creation and spurring research and innovation. The International Renewable Energy Agency (IRENA) reports that transitioning to EVs could generate up to 24 million jobs globally by 2030.
In Conclusion
The decision to ban petrol motorcycles in Kigali represents a pivotal move towards transformative socio-economic and environmental change, impacting the initial 26,000 motorcycles in the capital and setting the stage for a broader impact on over 130,000 motorcycles nationwide. As Rwanda becomes only the second nation globally to implement a ban on ICE vehicles, after Ethiopia, it positions itself as an important investment hub and a global climate leader. This bold step not only signifies an end to the dependency on fossil fuels but also illuminates a forward-thinking approach to tackling air pollution, reducing carbon emissions, and promoting clean energy alternatives. The ripple effects of this vision have the potential to stimulate economic growth, create new job opportunities, and energize local innovation in renewable technologies. Ultimately, only time will tell if such bans could provide a blueprint for breaking the used vehicle market’s stranglehold on 49 of the 54 African states, charting a new course for clean, conscientious mobility across the continent.
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