Jumia to switch fleet to EVs

From the newsletter

E-commerce firm Jumia East Africa wants to transition its fleet from fossil fuel vehicles to EVs. The company, which was founded in Nigeria, targets to use EVs for delivery of goods to millions of its customers to cut costs. It plans to transition a third of its fleet in the next six months. Jumia began electrifying its fleet in 2022. 

• Jumia East Africa is a subsidiary of Pan-African online retailer Jumia, which operates in 9 countries in Africa. The firm operates a delivery fleet with over 3,000 vehicles, primarily consisting of vans used for last-mile deliveries.

• Most of Jumia’s vehicles are fossil-fuel powered. The company plans to cut its logistics costs by up to 40% by switching to EVs. Logistics costs in Africa are three to four times higher than the global average due to high fuel prices and taxation.

More details

• In September 2022, Jumia announced a partnership with Biliti Electric to pilot the electrification of its fleet in Kenya after which it would be rolled out across other markets such as Uganda. The company uses third parties to make last mile delivery of goods in its markets.

• Jumia is one of more than 12.7 million companies in Africa. Most of these firms own at least a vehicle, while some own vast vehicle fleets. The rising cost of fuel in recent years has resulted in a growing number of companies in Africa switching to EVs.

• The transition to EVs on the continent is being driven by both the private, public and NGO sectors. Countries across the continent are also rolling out carbon taxes to make fuel more costly and introducing incentives for EVs. The Kenyan government is for instance planning to build 1,000 EV charging stations across the country. Uganda plans to set up 3,500 chargers by 2040.

• But the upfront cost of EVs remains on average higher than the average cost of an Internal Combustion Engine (ICE) vehicle. While the price of an ICE car starts from around $8,000 in Africa, an EV costs more than $38,000. But prices of EVs have come down significantly in recent years. This has resulted in a rapid growth in EV sales in Africa.

• Leading global EV manufacturers such as China’s BYD are expanding their presence in Africa by opening new dealerships. Africa has a population of more than 1.3 billion people. This number will grow to more than 2.5 billion by 2050. This is a big market for EV companies especially as electrification rates on the continent continue to rise. 

Our take

• Transitioning to EVs by Jumia mirrors what other firms on the continent are doing. It not only offers significant cost savings but also aligns with the global push towards sustainability. As EV prices continue to decline and infrastructure improves, more companies across Africa will likely follow suit. 

• Limited financing is however affecting the adoption of EVs in Africa. This is especially more so considering the prevailing high interest rates in most countries on the continent. Therefore, innovative financing models such as battery-as-a-service will play a pivotal role in lowering barriers of buying EVs. 

• The public sector should take the lead in the transition to EVs. The government is the single largest spender in African countries. Government ministries, departments, agencies and parastatals are major buyers of vehicles. Governments should take the lead in encouraging public sector bodies to transition their fleets to EVs.