As the world looks to reduce its carbon footprint and combat the effects of climate change, electric mobility is becoming an increasingly important topic. In Africa, where the effects of climate change are already being felt and the continent’s population is projected to reach 2.4 billion by 2050, the need for sustainable transportation solutions is even more pressing.
Despite contributing under 4% of global greenhouse gas emissions, Africa is particularly vulnerable to the effects of climate change. The continent’s low motorisation rate of 42 vehicles per 1000 people pales in comparison to the world average of 182. However, this is set to change as the continent’s e-mobility sector continues to grow.
Electric mobility is on the rise in Africa, with the number of startups in the sector surpassing 100 in 2022, up from under 30 just three years prior, according to industry mapping by AEMDA
As the continent’s population continues to grow and motorization rates rise, the adoption of electric vehicles is expected to increase. In 2023, there are several trends to watch for in the electric mobility market in Africa.
Two-wheelers dominate
One trend to watch for is the dominance of electric two-wheelers. According to industry mapping by AEMDA, close to 50% of all players in the electric mobility market are in the two-wheeler segment, which includes electric motorcycles, scooters, and bicycles. This is expected to follow the strong demand for motorcycles which has seen a five-fold increase in the last decade, to reach 27 million units in 2022.
Bikes coming full ‘cycle’
The COVID-19 pandemic has also seen a resurgence in bicycle usage globally, and this trend is expected to continue in Africa. E-bicycles are particularly well-suited for the continent, offering affordability, low maintenance costs, and a wide range of applications from delivery services to personal commuting. They also appeal to a younger demographic due to their relatively low barrier of entry in terms of registration or licensing.
Commercial transport accelerating
Another trend to watch for is the electrification of commercial transport, with an increasing number of electric buses and minibus taxis being piloted and sold in East and Southern Africa. Companies such as Basigo and ROAM are supplying electric buses in Kenya, OX Delivers are offering small commercial electric trucks in Rwanda, and GoMetro is piloting e-minibus taxis in South Africa.
Even more business models
There will be further diversification of business models in the African electric mobility market. Lease-to-own, rentals, and operating leases will continue to be popular options for accessing electric vehicles without the high upfront cost. One-off sales for electric vehicles, however, will remain uncommon due to the high cost and availability of mature vehicle financing instruments. Battery-as-a-Service (BaaS) is also gaining traction, where an operator sells the electric vehicle but maintains ownership and operations of the batteries and charging infrastructure.
Policy needs a push
Policy and regulations are key trends to watch in 2023. While the electric mobility industry is growing in Africa, the policy landscape is lagging behind. The relative complexity of the industry, inadequate information and understanding of existing technologies, political cycles and risk aversion all contribute to the slow adaptation of policy. With 10 African countries holding elections in 2023, there is both a risk and an opportunity for policy efforts to accelerate or curtail.
Leading the charge from East, West and South
A few countries that have made strides in their policy journey include Rwanda, Kenya, Zimbabwe, and Ghana. Rwanda, for example, has introduced duty exemptions for the importation of electric vehicles, batteries, and related charging infrastructure, as well as lower electricity tariffs for charging vehicles. Kenya has committed to a 5% vehicle electrification by 2025 and is in the process of developing a National E-mobility Policy to be adopted in 2023.
Zimbabwe has developed the National E-mobility Policy and Market Readiness Framework with the aim of turning the country’s transport sector towards sustainability. The policy is awaiting final adoption by the Cabinet. Ghana has developed its National Electric Mobility Policy and Market Readiness Framework, as well as a National Electric Mobility Roadmap, to support the growth of the e-mobility ecosystem in the country.
These policy developments are important because they provide a framework for the growth of the e-mobility industry in these countries, and they also signal the government’s commitment to sustainability and reducing greenhouse gas emissions. As more countries adopt similar policies, it is likely that we will see a significant increase in the number of electric vehicles on the road in Africa in the coming years.
Energy remains crisis
As the global supply chains for petroleum continue to be disrupted by the ongoing Russia-Ukraine conflict and the effects of the COVID-19 pandemic, Africa faces a growing challenge in meeting its energy needs. The increased oil prices resulting from these disruptions have added an additional $19 billion to the cost of meeting consumption in Sub-Saharan Africa, further driving up transport and commodity prices.
Fuel subsidies, a contentious issue in many African countries, are likely to remain so in 2023. While they can provide immediate relief to consumers by making fuel more affordable, they can also be a drain on government finances and discourage investment in more sustainable forms of energy. Furthermore, fuel subsidies are often regressive, disproportionately benefiting higher-income households and businesses and contributing to economic inequality.
However, there are some signs of hope on the horizon. The Africa Development Bank’s Electricity Regulatory Index shows that 34 out of 43 surveyed countries have implemented a Tariff Methodology and are taking steps to regulate the electricity sector. This is a positive indication of a growing commitment to addressing energy challenges on the continent.
Supply chains struggles continue, globally
Product supply chains for electric mobility in Africa will continue to face challenges in 2023, amid ongoing cross-border conflicts, a depressed global economy, and climate change-related weather events, among other unforeseen factors. As the continent, which is already a net importer of food and fossil fuels, continues to be increasingly exposed to volatility in commodity prices, electric vehicles will be no exception. The semiconductor chip shortage, coupled with COVID-related restrictions in China, will continue to disrupt the manufacturing of electric vehicles.
E-mobility companies on the continent are yet to have a significant foothold in the global supply chain for electric vehicles, compared to the 300 and 237 established manufacturing businesses in China and the USA respectively. Electric vehicles in Africa are mainly imported from Asia, with only a few venturing into local assembly. Organizations will need to develop more forward-looking strategies for securing products ahead of schedule, in order to remain agile in servicing the growing demand for electric mobility in Africa
Conclusion
As we look to the future of electric mobility in Africa, one thing is clear: the continent is at a tipping point. With oil prices on the rise and global supply chains disrupted, it’s more important than ever to invest in sustainable forms of energy. But as we make this transition, we must also consider the economic realities of the continent. The Ukraine-Russia conflict and the COVID-19 pandemic have pushed millions into extreme poverty, and Africa will need trillions of dollars to finance the transition to a more sustainable future.
Despite these challenges, there is reason for hope. The number of e-mobility startups in Africa is accelerating, and investments are flowing into the sector. And with a young, tech-savvy population and an abundance of renewable energy, Africa has the potential to leapfrog the developed world in terms of electric mobility. At AEMDA, we are committed to supporting the industry’s growth through research, policy development, member programs, and industry events. The time is ripe for Africa to lead the charge in electric mobility and reap the benefits of a sustainable and resilient future.