Zimbabwe cuts EV import duty

From the newsletter

Policies supportive of EVs are gaining momentum in Africa. Some countries are making bold moves, banning fuel imports completely, while others are reducing import duties and VAT. Zimbabwe is the latest example, with its 2025 national budget reducing import duty on EVs from 40% to 25% from January.

• The import duty reduction applies to pure electric vehicles. It targets buses, motor vehicles for transporting people, and those for goods transportation. Interestingly, electric tractors currently have an import duty of 0%.

• The country launched its national policy roadmap for electric mobility in 2022. Two years later, it is starting to implement some of the recommendations from its policy document.

More details

• The 2025 National Budget, themed "Building Resilience for Sustained Economic Transformation," includes mandatory tax registration for informal businesses, including car dealers. The government aims to promote electric vehicles (EVs) to reduce emissions, aligning its incentives with other African countries. The budget also supports solar-powered EV charging stations, recognising the synergy between EVs and solar power for sustainable transportation.

• Zimbabwe has a high motorisation rate of 91 vehicles per 1,000 people, higher than larger economies like Kenya, Nigeria, and Egypt. Approximately 1.5 million fuel-powered vehicles operate in the country. However, the country heavily relies on importing second-hand fuel vehicles, mainly from Japan, with an average age of over 11 years. Between January and September 2024, Zimbabwe imported $527 million worth of vehicles, with over $3.08 billion worth imported in the past six years. This is worrying, especially for Zimbabwe, which is struggling with high inflation that reached 105% in 2022.

• Concerned about the import cost, the government, through its national roadmap policy for e-mobility, aims to address this issue. It plans to mandate that automotive manufacturers ensure a certain percentage of their manufactured vehicles are EVs and will provide incentives to achieve this.

• The policy has identified and ranked vehicle categories for electrification priority. It prioritises intracity e-buses (including buses and minibuses), followed by 4-wheeler taxis, 2-wheeler personal vehicles, 3-wheelers, and 4-wheeler personal vehicles.

• The roadmap sets EV sales targets: 6% of total sales by 2025, 33.1% by 2030, and 62.3% by 2035. By 2030, all two- and three-wheelers sold are expected to be electric, with e-buses comprising 90% of bus sales. The roadmap proposes subsidies of 20% for two-wheelers and four-wheeler personal vehicles and taxis, and 40% for three-wheelers and buses for EV purchases until 2030, with continued support for buses beyond that.

• However, Zimbabwe's EV space remains nascent compared to neighbouring countries like Zambia and Botswana. Botswana has made significant strides, establishing a local EV manufacturing plant and even rolling out the first locally assembled EV. Nonetheless, the Zimbabwean government is optimistic and leading by example. There are over 1,000 EVs and hybrid electric vehicles. It has added 14 EVs to its fleet, including shuttle cars for Robert Mugabe International Airport and vehicles for the Central Mechanical Equipment Department's (CMED) driving school.

• The private sector is also preparing for the EV sector's maturation. Vaya, a ride-hailing service launched in 2020, offers a premium EV service. Infrastructure development is underway, with the government collaborating with companies like Agilitee to establish a vehicle assembly plant. Fuel companies are also installing charging stations in their garages.

Our take

• Policy can be a catalyst for growth. We saw this in Norway and China. Closer to home in Africa, we have seen it work in Kenya, Ethiopia, and Rwanda. But these countries have been more intentional, cutting taxes and adding incentives to make EVs attractive, like lower EV tariffs. Zimbabwe is providing only a small reduction in import costs, which is a drop in the ocean and won't lower prices enough to make EVs attractive. But we wait and see.

• Targeting and making import-friendly policies is the right step, especially for countries that don't manufacture vehicles. The second step is to focus on local manufacturing. Zimbabwe seems to have the right intent to incentivise local manufacturing. But the pace of implementation is worrying. It took them two years before implementing the first recommendation from the policy roadmap. As a lithium-rich country, we expect a more direct approach, even pursuing local EV battery manufacturing.

• It is always a challenge in Africa to implement set policies. But we await Zimbabwe's actions to see their intentions. Are they serious about the EV space, or do they just want to play along by announcing policies?