We reveal the cost of EV loans in key African markets

From the newsletter

interest rates charged on loans in Nigeria, Kenya and South Africa. We analysed rates charged by commercial banks as well as asset lenders on loans taken to buy EVs. We found a huge gap in the cost of loans, with South Africa having the cheapest loans out of the three countries. 

• We usually conduct the survey every first week of the month, and our latest findings show that the majority of loans are short-term, with tenures ranging between 12 and 60 months.

• Over the last three months, EV loans in all the three countries have been largely stable. This stability offers buyers predictability in their monthly instalments. 

More details

• Bank loans are significantly more expensive in Nigeria, Africa’s most populous country, than in Kenya, averaging around 32% per annum. However, asset finance loans are slightly more affordable relative to Kenya, with rates generally between 32% and 34%. These high financing costs reflect broader challenges in Nigeria’s credit markets, where lending risk is priced aggressively.

• In Kenya, access to EV financing is growing, but costs remain steep. Asset financiers such as M-Kopa and Watu Credit charge annual interest rates ranging between 18% and 45%, depending on the borrower’s profile and repayment terms. Commercial banks are comparatively cheaper, typically offering loans at 16% to 18%, although these rates fluctuate whenever the Central Bank of Kenya revises its benchmark lending rate.

• South Africa offers a stark contrast, with a more mature financial market that has made EV financing far more accessible. Consumers can obtain loans through personal credit, specialized green financing, or standard car loans, many of which include discounts for EV purchases. Interest rates are much lower than in East and West Africa, ranging from about 7% to 9% annually, making South Africa the most favorable market for EV loans out of the three. 

• Lending rates could however come down in Kenya and South Africa, where the Central Bank of Kenya (CBK) and the South African Reserve Bank (SARB) have lowered the benchmark interest to stimulate the economy amid easing inflation. In Nigeria however, rates are expected to remain steady as the Central Bank of Nigeria has kept the benchmark rates at 27.25% for one year. 

• This comes even as industry analysts estimate that financing demand for electric two-wheelers, the most popular EVs, alone could reach $8.9 billion by 2030, showing the scale of the challenge. To close this gap, some African governments are considering tax incentives, interest rate subsidies, and loan guarantees to de-risk EV lending. 

• At the same time, while loans are making EVs accessible to thousands of Africans, they are also contributing to their already high cost. In a continent where lending rates from some lenders can go as high as 48% per year, this makes EV ownership challenging. Lower interest rates will be key if more customers are to purchase EVs. 

Our take

• The gap between lending costs in Nigeria and the other two countries is set to widen. While the CBK and the SARB have been lowering their benchmark rates in a move that is likely to translate into cheaper commercial and asset finance loans for consumers, the CBN has maintained its high rates.  

• Given the ambitious industry growth estimates and the challenge posed by high lending rates, this has to be followed by government-backed incentives such as tax breaks, interest rate subsidies, and loan guarantees to be realized. 

• The high cost of traditional loans in some markets, particularly Nigeria and among certain asset lenders in Kenya, is driving innovation in financing. This has led to the proliferation of alternative models like pay-as-you-go schemes and battery-leasing.