Forward-looking African financial institutions are accelerating the transition to electric vehicles with attractive financing deals.

By Conrad Onyango, bird story agency

As e-mobility opportunities grow, Africa's financial institutions have begun introducing and marketing ‘low-interest’ and ‘flexible’  credit to accelerate the uptake of electric-powered vehicles.

Commercial banks and asset financiers in a number of countries are developing dedicated models for financing motorbikes and personal and public vehicles as they look to lock in billions of dollars in green auto loans.

In Kenya, three commercial lenders- NCBA, Family Bank and Kenya Commercial Bank(KCB) have announced strategic partnerships with electric mobility start-ups to ease the cost of accessing e-vehicles.

Family Bank and KCB are targeting public service vehicles through a partnership with startup BasiGo.

“Through this partnership, we will be offering financing for a 25-seater dubbed ‘BYD K6 BUS’ that requires far less maintenance than diesel-powered buses, with zero transmission of gases,” said Family Bank Chief Executive Officer, Rebecca Mbithi.

Under the deal, buyers will get up to 90 per cent financing for the 25-seater buses which sell for Ksh 5 million ( US$ 41,189), repayable over four years at Family Bank and three years at KCB.

NCBA, on the other hand, has launched a Ksh 2 billion  (US$ 16.4 million) kitty for green vehicle loans, targeting private and public service vehicles, with 80 per cent financing over a period of five years.

“We have received growing interest and requests from our customers who are keen to purchase electric vehicles,” said NCBA Group Director, Asset Finance and Business Solutions, Lennox Mugambi, in a statement.

NCBA also offered attractive interest rates in a market where interest rates for car loans can be north of five per cent per month.

Kenya’s central bank in September raised its benchmark lending rate by 75 basis points, to 8.25 per cent.

In Mauritius, AfrAsia Bank is offering a much longer repayment tenure of seven years with an interest rate of 5.15 per cent, for hybrid or pure electric cars.

“Specially designed for eco-friendly car choices, our Green Car Loan offers an array of benefits for driving the green way,” said the lender on its website. 

In North Africa, Asset financier, Abdul Latif Jameel Finance Egypt unveiled in August a program that offers customers electric mobility-related loans of up to EGP 4 million (US$ 208,900), with a five-year repayment period.

“ We have created this new financing option to help customers take their first step towards EV ownership and the initial feedback has been very positive,”  said, Abdul Latif Jameel Finance Egypt, CEO and Country General Manager, Mohamed El Gazzar.

In Uganda and Nigeria, startups like Tugende and MAX respectively have begun modelling startup financing plans for electric bikes, in anticipation of high uptake of the two-wheelers on the continent, compared to demand for electric cars and buses elsewhere.

A Shell Foundation-commissioned report, Financing the Transition to Electric Vehicles in sub-Saharan Africa 2022, covering Ethiopia, Kenya, Nigeria, Rwanda, and Uganda, shows that up to US$ 8.9 billion will be needed to finance demand for electric two-wheelers alone, by 2030.

“Given the size of the opportunity, interest in financing e-mobility (particularly two wheelers) is growing among financiers in Africa,” according to the report.

Kenya, with up to 315,000 units and Nigeria, with up to 330,000 units, are projected to record high annual sales of electric bikes by 2030. 

The Shell report disclosed that over 20 financiers in Africa, including commercial banks, Venture Capital funds, Private Equity funds, and Development Finance Institutions, have expressed interest in e-mobility and identified it as a ‘priority’ sector.

However, they are still struggling to understand the financing structure for electric-powered vehicles, especially motorbikes. 

“Asset financiers are currently faced with the challenge of being unfamiliar with electric two-wheelers credit cycles and technologies, such as the life cycle of batteries and the residual values,” according to the report.

bird story agency