Transport sector emissions are rapidly growing in Kenya and are expected to exceed 20 million tCO2e by 2030. Accounting for approximately 13% of total emissions, the transport sector is the second highest contributor of GHG emissions in the country and has been identified as a focus sector in Kenya’s enhanced 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.
The NSP’s overall goal is to accelerate 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 NSP 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.
To kick-start this process, the NSP will combine financial and technical interventions. On the financial side, it will apply several instruments to mobilise both the supply and demand for e-2Ws and e-3Ws. To overcome the barrier of higher upfront purchase costs, the NSP will deploy subsidies totalling EUR 7.5 million to finance 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. To tackle the issue of limited access to asset financing, especially for commercial fleets, EUR 3.5 million will be allocated as a second-loss partial credit guarantee. On the supply side, the NSP intends to unlock private sector debt financing through a first-loss credit guarantee fund totalling EUR 5.5 million, which is designed to absorb losses of up to the first 10%. This will help overcome the barrier of insufficient local manufacturing and assembly capacity for e-vehicles. Technical interventions will target both national and sub-national levels and are planned to address a wide range of issues, from tax reductions and policy concessions to charging infrastructure, innovation and skills training programmes, among others.
The NSP has two main objectives, to be reached by 2028:
- Penetration rate of e-2Ws and e-3Ws to reach 15% of the annual sales and vehicle registrations
- Local assembly of 80% of e-2Ws and e-3Ws sold in the domestic market
Through adequate financial and regulatory mechanisms, the project is expected to contribute to the establishment of local assembly capacity for over 100,000 units of e-2Ws and e-3Ws, resulting in the creation of about 3,500 direct jobs. At least 3 manufacturing and assembly plants are also expected to be supported by the NSP’s first-loss credit guarantee fund for suppliers. The NSP is also projected to leverage significant volume of public and private funds amounting to EUR 142.5 million. Finally, total GHG emissions reduction are expected to reach over 1 million tCO2e in the ten-year period following the NSP's implementation.