African EV tax policy takes off

November 12, 2024

From the newsletter

Research by MobilityX Africa, a data platform, shows that African governments are taking ambitious approaches to promote EV adoption. North and southern Africa are focused on manufacturing policies, East Africa leans more towards consumer policies, and West Africa has a mix of approaches. But everyone is experimenting.

  • Several countries are implementing import duty waivers and tax reductions to lower EV costs.

  • VAT exemptions are common across the different regions.

More details

  • Africa is not commonly known for manufacturing. It has relied heavily on importing second-hand vehicles and is home to 40% of used vehicles from developed countries in Asia, Europe, and America. 

  • Few countries are involved in manufacturing, most from North and South Africa, including Morocco, Egypt, and South Africa.

  • Africa is trying to enter EV manufacturing and is keen to develop policies to drive the sector as it doesn't want to be left behind. 

  • In North Africa, Tunisia, Egypt, and Morocco are looking inward to grow their EV markets, with policies that target promoting localisation. Tunisia and Morocco are giving tax exemptions for businesses investing in EV fleets and charging infrastructure.

  • Both are also supporting consumers by providing tax rebates, incentives and tax exemptions.

  • Morocco and Egypt's policies are bearing fruit with heavy interest from investors. Zeekr, a Chinese EV maker, wants to set up a manufacturing plant in Egypt. Gotion Power and ACWA are building Morocco's EV battery gigafactory. 

  • East Africa is home to big moves. Rwanda was among the first countries to embrace EVs and formulated friendly policies to support growth. Ethiopia became the first country in Africa to ban the sale of fuel vehicles completely.  

  • Kenya, Rwanda, and Uganda have waived VAT for locally assembled EVs. Rwanda and Uganda even provide tax deductions for companies investing in EVs or charging infrastructure.  

  • These policies have not been in vain. Rwanda, Kenya, Uganda, and recently Ethiopia now have local electric motorcycle assembly plants: Roam in Kenya, Ampersand in Rwanda, and Dodai in Ethiopia.  

  • In the bus sector, Kenya has Roam and BasiGo, and Uganda has Kiira Motors, which perform local assembly of e-buses.

  • West Africa is Africa's leading importer of used cars, importing over 900,000 used cars yearly. 

  • Senegal, Ghana, Nigeria, and Ivory Coast have tax incentives and import duty reductions for EVs. 

  • Nigeria and Ivory Coast have waived VAT and import duties for companies investing in EV charging infrastructure. 

  • Ghana has VAT and import duty exemptions for EVs used in public transportation. 

  • Senegal has over 140 electric buses in its bus rapid transit system as a result of the policies. 

  • In South, South Africa, once Africa's leading vehicle manufacturer but now topped by Morocco, there is one major player. 

  • South Africa is planning more subsidies and tax rebates for consumers and manufacturers transitioning to NEVs and potential import duty reductions for EVs from Europe and the UK.

Our take

  • Policy is one thing, implementation is another. It is good to see many African countries developing policies to support the EV sector. Implementation should follow, or these will remain a pipe dream. 

  • Even so, African countries should not be overambitious but cautious in their approach. Policies should be more realistic and target a gradual transition rather than a complete and immediate switch.

  • EVs are still expensive, so more affordable consumer financing is needed. As the market opens up, proper regulations are needed to protect consumers and financiers.