Ethiopia made headlines in February by becoming the first country in the world to ban the importation of fuel-powered cars. Later that spring, the Addis Ababa city administration moved to implement an outright ban on fuel motorcycles.
“The regulatory environment is incredibly supportive for e-mobility start-ups like ours,” says Yuma Sasaki of Ethiopian EV startup Dodai, which raised $4 million earlier this year. Dodai entered the Ethiopian market in 2021 to assemble and distribute electric two-wheelers in the market.
Sasaki, who earlier founded West African solar company PEG Africa (acquired by Bboxx in 2022), told ImpactAlpha on the sidelines of Africa E-Mobility Week in Nairobi that Rwanda’s ban on importing fuel-powered vehicles, coupled with Ethiopia’s forex liberalization in August, has created a competitive advantage for EVs – and an investor-friendly e-mobility sector.
Some 90% of Ethiopia’s energy supply comes from hydropower, providing an abundance of cheap electricity for consumers and businesses. “Partly for this reason, the operating costs for Dodai’s e-bikes are 95% cheaper than those of fuel bike,” Says Sasaki.
Such an edge caused Sasaki, who has raised a total of $7 million for Dodai since entering Ethiopia, to pivot from solar to e-mobility.
Policy nudge
EV adoption, along with the environmental benefits, could help cut over-dependence on oil imports for the transportation sector. Local manufacturing and assembly, if encouraged, could spur job creation opportunities. Africa as a whole could benefit as a supplier of crucial raw materials like lithium if the sector picks. Currently, Africa holds 5% of the world’s total lithium reserves.
Other African countries are moving to unlock the benefits of a transition to electric vehicles.
In March, Kenya introduced a draft of its own e-mobility policy, that when approved later this year, would provide incentives to promote EV adoption, build out EV infrastructure and support local manufacturing and assembly of EV vehicles.
Rwanda, which has spearheaded several clean transport initiatives, has abolished import taxes for EVs, spare parts, batteries and charging station equipment. German automaker Volkswagen launched its first EV in Africa in Rwanda and is now introducing local assembled electric tractors there, to cut emissions associated with the agricultural sector.
Other countries like Ghana, Angola and Tunisia have introduced import levy reduction policies since last year. In South Africa, which allocated around $50 million for transitioning to EVs in its budget this year, EV policies are still unclear and could be held up due to the country’s energy crisis.
Bumpy road
Reality is still catching up with the country’s EV ambitions, says Sasaki.
“While the prime minister and transport minister have established an ambitious vision for e-mobility, no plans are yet in place at the city administration level regarding the issuance of number plates for electric motorbikes,” he says.
Customs authorities are not yet fully familiar with electric vehicles, he says, “resulting in longer processing times for assessments, which can take weeks or even months rather than the expected days.”
Nativiating policy is familiar territory for Sasaki, who earlier worked with Uber. “When something new comes, the regulation needs to be modified, but the speed of adoption of the product is faster than the speed of the regulations,” Sasaki notes. Dodai is working closely with relevant authorities to help streamline these processes.
François Zirikana, an advisor for green mobility, energy and climate at German development agency GIZ Rwanda tells ImpactAlpha that,“policy-wise, there are still gaps and the environment is not that conducive to startups.”
“Governments fear losing taxes due to tax incentives,” he says. One option, he says, would be to shift taxes to internal combustion engine vehicles with carbon tax. That, as well as addressing underlying economic issues while enhancing tax collection systems, “can bridge anticipated tax gaps.”
