Co-op Bank commits Sh1.5bn to electric matatu financing

Nairobi, Kenya - Co-operative Bank has allocated Sh1.5 billion to finance the acquisition of electric public service vehicles (PSVs), with a focus on matatu Savings and Credit Co-operative Societies (Saccos) as the nation strives to hasten the transition away from fossil-fuel-powered transportation. This financing initiative will be in effect for the next 12 months and will cover up to 90 percent of the purchase price of electric vehicles, enabling Saccos to purchase vehicles in fleet form rather than individual operators financing the transition individually.

The high initial cost of electric vehicles and limited charging infrastructure are significant obstacles to their adoption in Kenya's public transport sector. Co-op Bank's Director of Cooperatives Banking, Vincent Marangu, emphasized that the lending model is tailored to the operational needs of matatu Saccos, which typically manage multiple vehicles across various routes.

Marangu explained that Saccos are already planning for electric options and require financing that accommodates a fleet of vehicles. Consequently, the bank is providing loans directly to Saccos on more favorable terms, allowing them to acquire electric vehicles at the scale demanded by their routes. Co-operative Bank will offer loans at a rate one percentage point below the prevailing Kenya Shilling Overnight Interbank Average (KESONIA) rate, and will also finance the installation of electric vehicle charging stations.

In addition to financing the purchase of electric vehicles, the bank's initiative will incorporate digital fare collection systems, which could assist operators in enhancing revenue tracking and managing fleet operations. Two 16-seater electric vans supplied by local electric mobility company BasiGo have already been allocated to Enabled Mashariki Sacco under this arrangement.

BasiGo's Chief Executive, Jit Bhattacharya, noted that electric vehicles offer lower operating and maintenance costs, which could make them economically appealing for public transport operators. The ultimate profitability of electric vehicles, according to Bhattacharya, depends on vehicle utilization and financing costs. Bhattacharya remarked that partnering with Co-op Bank enables more Saccos to access these vehicles, and the company eagerly anticipates supplying the subsequent electric vans.