Agency Report
In many net oil-importing African countries, the transport sector is more than a mobility issue. It is a structural drain on foreign exchange. Fuels for road transport account for the equivalent of 2% to 6% of GDP in these economies, according to a World Bank report titled Electric Mobility in Developing Countries, published last March.
A strong dollar and volatile oil markets exacerbate that vulnerability, exposing national budgets to sharp swings. Fuel subsidies often deepen the strain. In Nigeria, before their suspension in May 2023, they accounted for nearly 2% of GDP in 2021.
Local electricity as an economic alternative
The case for electric vehicles is fundamentally about energy efficiency. Electric motors are four to six times more efficient than combustion engines, which lose much of their energy as heat. At the macroeconomic level, accelerated EV adoption could cut national fuel consumption by 30% to 40% by the mid-2030s.
For countries such as Senegal and Mali, the World Bank sees a double dividend. Replacing imported oil with locally generated electricity, harnessing the Sahel’s solar potential or hydropower, would strengthen energy security and reduce exposure to external oil shocks.
Ethiopia offers a case in point. The country has announced a full ban on imports of combustion-engine passenger vehicles and is leveraging its hydroelectric capacity to power its fleet. The policy is backed by several initiatives, including the construction of 2,300 charging stations.
Finance ministries have raised concerns about declining fuel tax revenues as EVs replace combustion vehicles. However, projections suggest the impact would be gradual. Under an ambitious scenario, with EVs accounting for 30% of vehicle sales by 2030, fuel tax revenues would decline by only about 10%.
The World Bank argues that indirect gains would more than offset these losses. Lower health spending is one example. In cities such as Dakar and Lagos, road transport contributes 30% to 50% of fine particulate pollution. Greater budget stability is another benefit, as electrification would reduce or eliminate costly fuel subsidies.
Prioritizing high-impact segments
To maximize balance-of-payments gains, the World Bank recommends a targeted approach rather than a uniform transition. Priority should go to high-usage segments, including urban buses and two- and three-wheelers such as boda-bodas, which log two to five times more mileage than private cars.
Dakar’s electric bus rapid transit system, the first of its kind on the continent, reflects this strategy. By focusing on mass transit, Senegal aims to curb oil imports while improving urban mobility and productivity.
The transition, however, faces significant hurdles. High upfront EV costs, limited charging infrastructure, unreliable power supply and weak regulatory frameworks could slow adoption. Industrial and financial constraints also remain, including the need to develop local value chains and expand access to financing