SolarTaxi secures EV financing deal with Ghanaian bank

From the newsletter

SolarTaxi, a Ghanaian e-mobility company, has secured a partnership with First National Bank Ghana to provide consumer financing for electric vehicles. This collaboration enables homeowners to acquire an EV by accessing loans of up to 70% of their property value. The financing will be provided in US dollars.

• SolarTaxi’s US dollar financing aligns with its EV pricing, as the company already sells its EVs in the greenback. This approach helps mitigate currency fluctuations and ensures pricing stability, but it may pose affordability challenges for local consumers who earn in Ghanaian cedis.

• Banks are focusing on EV car financing, while asset financing firms like M-Kopa, MAX, and Watu Credit dominate two- and three-wheeler financing. This divide shows that banks target wealthier buyers while asset financiers drive mass adoption in emerging markets.

More details

• SolarTaxi’s partnership with First National Bank Ghana introduces an Equity Release Loan, allowing property owners to unlock a portion of their home equity to fund their EV purchase. This financing scheme is available to both existing and non-customers of First National Bank Ghana. 

• However, financing consumer purchases in US dollars presents challenges in Africa due to currency fluctuations. For instance, the cedi’s depreciation against the US dollar moderated from 54.2% in November 2023 to 27.8% at the end of December 2023. In 2024, the Cedi depreciated by 8.3% year-to-date compared to 21.5% recorded in the same period in 2023. 

• This volatility means consumers may end up paying far more than originally agreed, making affordability a major concern. In January 2025 alone, the cedi recorded a 2% depreciation against the dollar, highlighting the currency’s instability. The unpredictability of Ghana’s economy suggests that loans denominated in foreign currency could pose a financial burden rather than an advantage for local consumers.

• Asset financier Mogo discontinued dollar-denominated loans in Kenya in May 2024 after widespread consumer complaints. Borrowers faced soaring repayments due to the weakening Kenyan shilling, making loans unserviceable. Following an investigation by the Competition Authority of Kenya (CAK), many borrowers, initially attracted by the lower interest rates, found themselves struggling with unexpectedly high repayments.

• Ghana's financial regulations restrict foreign currency loans to entities earning in foreign exchange. The Bank of Ghana mandates that banks must not grant USD loans to customers without foreign exchange earnings, aiming to shield borrowers from currency risks. Despite this, some financial institutions continue to introduce USD-denominated lending, particularly for asset-backed financing.

• Such loans are typically targeted at high-net-worth individuals or businesses operating in global markets. However, extending this model to EV financing for homeowners raises concerns about compliance with consumer protection laws. If left unregulated, this could lead to financial distress for borrowers, mirroring the challenges faced by Mogo customers in Kenya.

• In Africa, banks primarily finance electric cars, targeting higher-income individuals, while asset financing companies such as Watu Credit, MAX, and M-Kopa dominate the two- and three-wheeler EV market. Unlike banks, asset financiers adopt flexible payment models, including pay-as-you-go (PAYG) and daily instalment plans, which make EVs more accessible to lower-income earners. 

Our take

• Implementing lease financing could accelerate EV adoption in Africa by reducing upfront costs and accommodating rapid technological advancements. As EV technology evolves, new models with improved range and efficiency are frequently introduced, making long-term ownership less attractive. Consumers may prefer leasing over traditional loans, which lock them on a vehicle for years without the flexibility to upgrade.

• The regulatory gap governing foreign-denominated loans exposes consumers to high-risk financial products. Borrowers who default on property-backed USD loans risk losing both their home and their EV, which could discourage their uptake. Without clear consumer protection policies, banks and financial institutions may exploit this loophole to push high-risk loan structures on unsuspecting borrowers.

• The success of EV adoption in Africa will depend on financing models that balance affordability, currency stability, and long-term consumer protection. If left unchecked, USD-denominated loans could slow progress rather than accelerate the transition to sustainable transportation.