Spiro hits 1,000 sales in Uganda

From the newsletter

Africa's largest electric motorcycle company, Spiro, has clocked over 1,000 sales in just five months after entering the Ugandan market, according to Gaurav Anand, Spiro's Country Head in Uganda. These sales mean the company sold an average of 200 e-bikes per month—about 20 times more than the leading company, Gogo.

• The company raised $50 million in May this year and targeted market expansion, with Uganda being the immediate focus. Other markets it has operations in include Benin, Togo, Nigeria, Kenya, and Rwanda.

• Last month, its financing partner, Yongeza Capital, partnered with Oryx Energies Uganda, an oil and gas company, to expand battery swap stations for Spiro motorcycles.

More details

• Electric motorcycles are gaining popularity in Uganda due to their low maintenance costs, enabling riders to increase their take-home earnings. Over 3,000 of them are currently in operation. But the high purchase cost makes them unaffordable to many who are attracted by the savings on operation and maintenance costs.

• When entering markets, Spiro has always partnered with financing companies to bridge the affordability gap that is common across Africa. In Uganda, it has partnered with financing companies like Mogo Uganda, Asaak, and Yongeza Capital.

• Last month, its financing partner Mogo Uganda partnered with Absa Bank Uganda (formerly Barclays Bank of Uganda) to provide $5.2 million in credit to provide affordable loans to boda-boda riders to acquire electric bikes. This initiative is expected to drive sales of electric motorcycles in Uganda, not only from Spiro but also from other companies that Mogo finances, like Zembo.

• Spiro has not only been focusing on solving the financing cost, but it is also addressing the issue of battery cost. The company wants to ensure a steady supply of electric motorcycle batteries and cut costs to make them affordable. Last month, it partnered with PG Electroplast, a leading provider of electronics manufacturing services in India. The partnership will see PG Electroplast manufacture electric motorbikes and lithium-ion batteries in India for the African market.

• The strategy seems to be working so far, though some benefits, especially in battery manufacturing, will be felt later when the supply kicks in.

• The market is, however, not without competition. Other players like Zembo, with a fleet of over 700, and Gogo, with over 1,800, will compete with Spiro for the same market. Product offerings will be key. Those with customised products suitable for African markets will succeed. Spiro has more experience in this having been in the sector for a long time.

• Another battle will be on charging infrastructure. Riders need battery swap stations conveniently located along their operation routes. So far, Spiro is making progress in this area. Its financing partner, Yongeza Capital, has been launching battery swap stations. Last month, it launched two, bringing the total under its operation to over 10. But overall, Spiro has over 32 battery swap stations, compared to 66 for Gogo and 29 for Zembo.

Our take

• Spiro's sales numbers show they know the market secret. The market is still very nascent, and partnership will be key. Seeking partners who are specialists in what they do would allow them to focus on their core business of electric motorcycles.

• What will be more important to solve the affordability gap, is partnerships with financing companies. So far, this is going well. For scale-up, more partners will be needed, or partners with significant capital would be more essential. Banks can enter the business as the market matures and becomes more formalised for easy lending.

• Players in the oil and gas sector hold great potential to set up charging infrastructure. They have the space, the money, and the petrol stations spread out, and this could be an additional revenue stream for them.