Context
Ethiopia’s rapid urbanisation is driving travel demand, congestion and transport emissions. The sector produced about 3% of national CO2 emissions in 2010 and is projected to reach 20% by 2030. Urban transport relies heavily on ageing, poorly integrated diesel buses and minibuses, the sector’s largest emissions source. Yet Ethiopia’s predominantly renewable electricity mix and strong policy commitment create significant potential for clean mobility. In 2024, the country banned imports of internal combustion vehicles and introduced EV tax incentives. National targets include 4,850 e-buses and 148,000 small EVs by 2030, while the Addis Ababa Structural Plan envisages 15 Bus Rapid Transit (BRT) corridors and fully electric public transport. Transformative investment is needed to cut emissions, improve air quality and expand accessible, sustainable urban mobility.
Goals and approach to transformational change
The project aims to accelerate the decarbonisation of Addis Ababa’s transport sector by demonstrating viable, scalable e-mobility models. It will deploy 110 e-buses, 800 e-minibuses, 250 chargers, air-quality sensors and two electrified BRT depots, while reinforcing the enabling infrastructure and institutions needed for wider adoption. Grid assessments, charging expansion, stronger regulations, procurement standards and public-private partnership frameworks will address key market barriers. Inclusive vehicle standards, training and awareness measures will support operators, informal workers, women, elderly people and other vulnerable users. By demonstrating workable financing and operating models at scale, the project aims to create a pathway for wider electrification of public transport across Addis Ababa.
Components and support mechanisms
The Financial Cooperation (FC) component combines a capital expenditure grant, credit lines to local banks, and guarantees against default and foreign exchange risk to de-risk the electrification of around 10% of Addis Ababa’s ageing minibus fleet. As operational data and market confidence improve, banks are expected to progressively finance further fleet conversion. FC support also strengthens the city’s transport authority to structure public-private partnership contracts for future BRT corridors.
The Technical Cooperation (TC) component develops a national electrification strategy, assesses grid readiness and depot infrastructure, and strengthens institutional and financial capacity. It also trains Ethiopian financial institutions on risk-sharing instruments and supports Gender Equality and Social Inclusion (GESI) through workforce training, inclusive standards and awareness programmes.
Long-term impact
Deploying 110 e-buses and 800 e-minibuses is expected to avoid around 113,000 tCO2 over the project period. The larger mitigation potential comes from replication: electrifying Addis Ababa’s wider bus and minibus fleet could reduce emissions by more than 380,000 tCO2 annually. By demonstrating viable financing, infrastructure and operating models, the project aims to establish a pathway for city-wide public transport electrification and sustained emissions reductions.