M-KOPA drives e-motorbike revolution in Kenya

October 28, 2024

From the newsletter

Africa's leading fintech company, M-KOPA, just published its annual Impact Report, Pathways to Progress, which states that it has provided $1.5 billion in credit to 5 million customers in five African countries, including 1500+ electric motorbike customers.

  • M-KOPA initially financed solar home systems and mobile phones in Kenya and has expanded to Nigeria, Uganda, Ghana, and South Africa. 

  • In 2023, it expanded its financing to include electric motorbikes in Kenya and now targets to finance more riders.

More details

  • With roughly 30 million ICE motorbikes on Africa's roads, each emitting 15 tonnes of CO2 over its lifetime, the need for sustainable transport solutions is critical.  

  • Annually, these motorcycles contribute over 60 million tonnes of CO2 emissions, and in Kenya, the transport sector is the leading sector in emissions.

  • To mitigate this environmental impact, a shift towards electric motorbikes is essential, but their high cost often presents a barrier. 

  • This challenge is compounded by the fact that approximately 75% of adults in Sub-Saharan Africa lack formal employment, resulting in financial exclusion and limited access to traditional financing options.

  • M-KOPA stepped in to support the transition to electric mobility by offering e-motorycle financing in Kenya. This initiative makes electric motorbikes more accessible, especially for those without the capital for an outright purchase.

  • Riders who transitioned to electric motorbikes through M-KOPA's financing are seeing significant economic benefits, with average daily savings of 30% compared to petrol motorbikes. 

  • These savings come from reduced fuel and maintenance costs. A rider's take-home income and their financial well-being are improved as they can earn USD 3.50 per day.

  • 95% of riders who financed electric motorbikes through M-KOPA use them for income-earning activities, with 75% reporting that their income increased by 50% or more.

  • M-KOPAs financing model involves them partnering with electric motorbike manufacturers, currently, Roam and Ampersand, to offer financing solutions to riders. The deal structure involves a deposit followed by manageable daily payments, tailored to the rider's income patterns.

  • Although the electric motorbike financing market is relatively new and considered risky by some investors, other players like Watu Credit, Mogo Financing, and 4G Capital in Kenya are now entering the space.

  • M-KOPA aims to accelerate the transition to electric mobility in Africa by expanding its electric motorbike financing program. This includes reaching more riders, partnering with more manufacturers, and expanding into new markets.

Our take

  • Affordability and access to credit are major obstacles for many Africans who want to purchase electric motorbikes. The high cost of electric motorbikes is a barrier for many willing consumers, and the lack of credit history makes the situation even worse for most of the population. Worse yet, even those who can access credit face high interest rates and a long, tiring application process.

  • The emergence of asset financing companies is welcome news. However, many African countries don't have regulations to support such companies' operations. This sometimes puts the consumer at the mercy of the company, leaving them vulnerable to exploitation, such as hidden fees or unfair contract terms.

  • Innovations like digital payments and tracking are facilitating record-keeping to avoid such cases. However, this alone won't solve the overarching challenge of insufficient regulation. 

  • The relationship between regulations and innovations is complex. While regulations are essential for providing a framework and ensuring consumer protection, excessive or premature regulations can stifle innovation. Kenya, in particular, has thrived in innovation because of the freedom and lack of tough regulations that can limit progress.

  • To truly benefit from electric motorbike technology, African countries need a regulatory environment that protects consumers while encouraging innovation. This balanced approach will require careful consideration of the potential benefits and risks of both regulation and technological advancement.