Summary
· E-mobility is gaining ground in Tanzania faster than in any other East African country, according to a new report, which, however, also highlights hurdles impeding the switch to electric vehicles in the country
Dar es Salaam. E-mobility is gaining ground in Tanzania faster than in
any other East African country, according to a new report.
The report titled Africa E-Mobility
Alliance, which was released last month, shows that there are at least 5,000
electric vehicles (EVs) in Tanzania. However, e-mobility remains a “very young”
industry due to a number of challenges.
The industry faces a number of
barriers slowing adoption, including high import taxes, unclear government
policy, limited funding, too few technicians, low electricity grid access and
limited consumer knowledge.
As of February 2023, there were at
least ten companies involved in importing, selling, retrofitting, servicing and
charging electric vehicles in Tanzania.
However, stakeholders say the
aforementioned hurdles stifle significant opportunities in the relatively open
field.
Energy permanent secretary Felchesmi
Mramba yesterday said the government was doing all in its power to create an
enabling business environment to promote investment in e-mobility.
He said the government will ensure
enough electricity is available for EVs.
“We are ready to partner with the
private sector to ensure there are enough centres for charging electric
vehicles,” Mr Mramba told The Citizen by phone.
In a fresh bid to promote efficient
and cleaner energy, he said the government had engaged a consultant to develop
a strategy that will cover, among other things, the use of EVs and vehicles
powered by compressed natural gas.
EV’s are currently out of the reach
of many Tanzanians due to high taxes, according to the report.
Currently, import taxes for
four-wheel (4W) vehicles – including import duty, VAT, excise duty and others –
can reach up to 100 percent of the value of the imported vehicles.
Along with providing loan guarantees
for local banks for EV purchases, reducing import taxes were identified as
having the greatest potential to boost the private sector by respondents,
according to the report.
The report shows that 70 percent of
respondents ranked this as their first or second highest policy priority.
“Import taxes should be lowered on
EVs to help bring them to parity with fossil fuel vehicles, such as by reducing
import duty and VAT,” says the report.
On the question of policy, according
to the report, lack of relevant policy is seen as a clear drag on the sector by
e-mobility startups in Tanzania.
Even though the government
encourages the use of renewable energy in transportation systems, there are
currently no specific incentives for the import, manufacturing, assembly, or
purchase of electric vehicles in Tanzania.
“This means that cleaner
technologies are having to compete directly with polluting fossil fuel
vehicles.
“There is also a need for more
clarity from and within government bodies on the policy related to electric
vehicles in Tanzania, as well as increased coordination between government
bodies on matters related to e-mobility,” the report says.
Registration policies for all
electric vehicle modes are needed to ensure that companies are facing the same
streamlined system.
EV standards, the report explains,
will help to ensure quality products in the market, and to build consumer and
government trust in electric vehicles.
On the aspect of limited funding,
the report states that the lack of financing - be it grant, equity, or debt -
comes up consistently in conversations with e-mobility companies in Tanzania.
Yet, very little investment has gone
into the sector in Tanzania.
Of the ten companies in the sector,
according to the report, in total e-mobility companies are estimated to have
raised just around $1 million (about Sh2.3 billion).
“ This pales in comparison to the $5
million in Uganda, or $50 million in Kenya, which have comparable vehicle
fleets ripe for replacement,” reads a part of the report.
Industry players request for a wide
range of support from institutions, including but not limited to grant funding,
providing educational programs for the workforce, publishing policy papers,
convening workshops and roundtables, and introductions to investors.
On the aspect of low electricity
grid access, as in many countries, grid access is highest in cities and
dwindles in rural areas.
Similarly, the report expounds,
vehicle density is highest in urban areas - thus the opportunity for EVs begins
in Tanzanian cities.
Rural areas may need a combination
of approaches to provide electricity for EVs, including grid extension and mini
grids.
Currently, around 40 percent of
Tanzanians have access to grid electricity.
Tanzania has very ambitious goals to
electrify 75 percent of the country by 2025 as part of its Vision 2025.
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