MSMEs are key in Advancing Kenya's Green Transportation Efforts.
13.08.2024
Micro, Small, and Medium Enterprises (MSMEs) are undeniably the backbone of Kenya's economy, significantly contributing to economic prosperity and social well-being. These enterprises play a crucial role in fostering innovation and introducing new ideas into the market, thereby enhancing economic diversity and productivity. It is estimated that MSMEs contribute more than 34% to the GDP.
As the journey to sustainable transportation has reached a point of no return, we cannot afford to leave behind MSMEs, which are key drivers of the economy. The potential of these enterprises can be harnessed to address the challenges that hinder Kenya's progress towards achieving sustainability in the transport sector.
In addition to adopting eco-friendly means of transportation for their goods and services, MSMEs can play a vital role in investing in businesses that contribute to Kenya’s green transportation efforts, such as establishing battery charging stations for electric vehicles (EVs).
According to the World Energy Investment 2024 report by the International Energy Agency (IEA), Kenya made tremendous progress in adopting battery electric vehicles in 2023.
The IEA reported that global sales of electric buses reached about 50,000 units in 2023, representing 3% of total bus sales, with 60% of those sales occurring in China.
Kenya aims to have at least 200,000 electric motorbikes by the end of this year. While this target may seem overambitious, it is achievable.
Despite the immense benefits of e-bikes for boda boda riders, such as enabling them to save more than 30% compared to their counterparts on fossil-powered bikes and protecting the environment, adoption remains slow.
Air pollution from motorbikes and vehicles exposes millions of Kenyans to diseases, including stroke, ischemic heart disease, chronic obstructive pulmonary disease, lung cancer, pneumonia, and other ailments.
Unlike developed countries where industries primarily emit carbon, in developing nations like Kenya, transportation and agriculture are major culprits.
There are about three million boda boda riders in Kenya, and the United Nations estimates that more than five million Kenyans benefit from their incomes. If Kenya succeeds in switching even half of its motorbikes and cars to electric within the next five years, it will be a promising sign that the country can become climate-neutral (Net Zero Emissions) earlier than 2050.
To accelerate the adoption of electric vehicles (EVs), MSMEs can be supported to help establish infrastructures like charging stations. Currently, charging infrastructures for EVs are concentrated in major cities and towns, disadvantaging rural areas. Empowering MSMEs to venture into this area can increase the number of e-bikes in the country, as riders will not worry about where to charge them.
The draft National e-Mobility Policy by the Ministry of Roads and Transport identifies inadequate charging infrastructure, high capital costs for setting up charging infrastructure, high upfront costs of EVs, high electricity costs for both domestic and commercial charging, and limited electricity network reach in the country as challenges slowing down the adoption of EVs.
As a measure, the policy proposes the establishment of low-interest loan programs to provide financial assistance to businesses and organizations investing in EVs, and calls for government collaboration with financial institutions to develop affordable e-mobility financing products that support women, youth, and persons living with disabilities. If actualized, this can be a significant boost for MSMEs, which are key to accelerating the green transportation effort.
Kenya has several companies manufacturing EV bikes, such as Ampersand, Roam, Fika, Spark, and Spiro. Recently, Mogo opened its first all-electric bike shop, signaling progress towards decarbonizing the transport industry.
These efforts can be supplemented by MSMEs, especially in investing in charging infrastructure across the country. This will enable motorists to travel on EVs in any part of the country without worrying about where to charge their cars or e-bikes.
Domas Mineikis is Kenya Country Manager, MOGO