Context
Transport sector emissions are rapidly growing in Kenya and are expected to exceed 20 MtCO2e by 2030, with road transport accounting for 98% of sector emissions. Accounting for approximately 13% of total emissions, the transport sector is the second highest contributor of greenhouse gas (GHG) emissions in the country. Transport has been identified as a focus sector in Kenya’s enhanced Nationally Determined Contribution (NDC) commitments and National Climate Change Action Plan. With 72% of the population residing in rural areas and a low vehicle ownership rate of 28 vehicles per 1000 persons, there is a significant leapfrog opportunity for e-mobility development in Kenya. With ongoing rapid motorisation, especially in the two-wheeler (2W) and three-wheeler (3W) segments, an accelerated transition to e-mobility is needed to avoid the lock-in emission impacts of fossil fuel-powered motorisation and to maximise the emissions reduction potential of the transport sector.
Goals and approach to transformational change
The “Kenya – Small Vehicles E-Mobility” project has the overall goal of accelerating the transition towards e-mobility to achieve reductions in transport sector emissions, as well as create green jobs and industrial growth in the assembly and manufacturing of e-vehicles. The project will therefore focus on facilitating the penetration of e-2Ws and e-3Ws in peri-urban and rural areas to help the market reach a take-off point for an irreversible transformation.
Components and support mechanisms
The project will deploy a combination of demand- and supply-side instruments to accelerate the adoption of e-2Ws and e-3Ws. On the demand side, a total of EUR 6.6 million will be allocated to overcome the barrier of high upfront purchase costs and limited access to asset finance. This includes EUR 5.6 million deployed through a revolving co-financing mechanism and EUR 1.0 million through demand-side credit guarantees. These funds aim to crowd in commercial lending for end users and fleet operators, supporting the deployment of approximately 65,000 e-2Ws and e-3Ws (60,000 e-2Ws and 5,000 e-3Ws), with a focus on peri-urban and rural markets. On the supply side, EUR 7.6 million will be allocated to guarantees to support SME finance, particularly for EV assemblers, manufacturers, and mobility startups. These instruments collectively address high down payment requirements, weak collateral positions, limited access to finance, and insufficient local manufacturing and assembly capacity.
Long-term impact
Total GHG emission reductions are expected to reach over 1 MtCO2e in the ten-year period following the project’s implementation. It will be accompanied by the mobilisation of local assembly capacity for over 100,000 of e-2Ws and e-3Ws, resulting in the creation of about 3,500 direct “green jobs”.
