If approved, the policy will enforce zero-emission vehicle (ZEV) sales targets and investment criteria for car manufacturers and assemblers to qualify for government incentives. The policy will also establish clear requirements for local content (using locally sourced materials) in EVs that will be implemented gradually. The policy will further facilitate the production of EV components and support local battery manufacturing, recycling, and repurposing efforts.

At the launch of the draft policies, Kipchumba Murkomen, Kenya’s transportation cabinet secretary, noted that “the shift to electric vehicles significantly cuts emissions of greenhouse gases while reducing the petroleum import bill, currently standing at KES 628.4 billion ($4.8 billion). It will also promote local manufacturing and create jobs.”

To further promote EVs, Kenya has started issuing green-coloured number plates. The initiative aims to “raise awareness about EVs among the general public and encourage more people to consider switching to e-mobility,” Murkomen added.

The policy, launched in collaboration with the trade and investment ministry, will glean from the expertise of the private sector, international investors, and academic institutions to build the necessary EV infrastructure.

Kenya is a key player in African e-mobility, attracting prominent EV manufacturers. BasiGo, an electric bus company backed by the CFAO Group, is one of the pioneers of e-mobility in the country. The company’s electric buses serve Nairobi residents as commuter vehicles, popularly referred to as matatu. ROAM Motors, is also introducing electric buses for Nairobi’s bus rapid transit (BRT) system, but is currently offering electric motorbikes nationwide.

Ride-hailing companies have also joined the e-mobility movement in Kenya. In 2023, Uber partnered with Greenwheels Africa for electric motorbike rentals. Likewise, Bolt has invested over KES 100 million ($770,000) to integrate e-mobility solutions into its services.

This adjustment, effective from Q2 2024, is in response to changes in inflation, which remained steady at 3% in Q1, indicating the central bank’s aim to maintain stable prices and promote economic growth.

“The decision of the MPC is based on [the] macroeconomic forecast made in March 2024, which requires an increase in the scope of the monetary policy actions to contain the lingering inflation pressures arising from global economic developments,” said Emmanuel Tutuba, the central bank’s governor.

Tanzania’s economy grew by 5.1% in 2023, up from 4.7% in 2023. Growth in the first quarter of 2024 was also estimated at 5.1%. This growth was supported by increased public investment, especially in infrastructure, that sought to boost the private sector activity and investment.

Q1’s inflation remained under the country’s target of below 5% and regional economic blocs’ convergence criteria. This stability was maintained through monetary policy and sufficient domestic food supply.

As of January 2024, the BOT changed its monetary policy approach from focusing on the quantity of money to using interest rates. At that time, BOT said that an interest rate-based policy might give the bank more control over economic conditions. 

“The implementation of monetary policy in the first quarter of 2024 succeeded in containing the seven-day interbank interest rate within the target band of 3.5-7.5%. Credit was mostly directed to agriculture, mining, transport and manufacturing activities,” BOT said.

Under this framework, the BOT sets the CBR based on alignment with low inflation and support for economic growth. The CBR guides monetary policy, allowing for either tightening or expansionary measures. 

However, it does not fix interest rates offered by banks and financial institutions in Tanzania, which market dynamics will still influence.

Data seen by TechCabal suggests this decline is primarily due to a steady core inflation rate of 3.4% in both periods. The main driver of this core inflation was the rise in service prices, which jumped to 5.5% for the year ending March 2024, up from 5.4% in February 2024.

The increase in service prices was linked to higher passenger transport costs, rising to 2.6% in March 2024 from 1.2% in February 2024. Financial services also saw a significant jump, reaching 13.4% in March 2024, compared to 0% in February 2024. This notable growth in financial service inflation warrants further investigation, and it is unclear if the government has taken specific measures in this sector.

Read more: Kenya’s March inflation drops to 5.7% as KES gains against the US dollar

Inflation for other goods was lower, reaching 1.6% for the year ending March 2024, down from 1.8% in February 2024. Relatively stable prices for most goods drove this slowdown, save for dried kapenta (silver cyprinid), popular local gin (waragi), and goat meat, which saw price increases in March 2024 compared to February 2024.

“Meat prices increased by 14.0 percent in March 2024 compared to 9.3 percent recorded in February 2024,” a report from the Uganda Bureau of Statistics states. 

Energy inflation 

Uganda’s annual energy and fuel inflation slowed to 7.6% in March 2024 compared to 8.0% in February 2024. This moderation was thanks to decreased price increases for charcoal, firewood, and petrol.

At the same time, the slowdown in energy and fuel prices suggests potential government interventions to stabilise fuel prices or promote alternative energy sources.

Between March 2023 and March 2024, Kenya recorded increased costs in transportation (up 9.7%), housing and utilities (up 8.0%), and food and beverages (up 5.5%). However, the cost of these commodities fell in March after the Kenyan shilling posted gains against the dollar, currently trading at KES 132 to the dollar. 

Amidst these gains, the cost of moving goods, maintaining homes, and purchasing essential items remains high, indicating a high cost of living during this period.

“These three divisions [cost of moving goods, home maintenance and purchasing essential items] account for over 57% of the weights of the 13 broad categories,” said the Kenya National Bureau of Statistics (KNBS) in a statement. 

The consumer price indices and inflation rates come from surveys done each month. These surveys examine how much goods and services cost in shops and stores. The KNBS then picks a range of things that Kenyans typically buy. The surveys take place in the second and third weeks of the month and cover different areas across Kenya, with shops chosen to represent what people buy.

Kenya’s central bank (CBK) and others in East Africa are adjusting interest rates to support their struggling economies as they face inflation, currency depreciation, and global supply issues. This implies that there seems to be a change away from using coordinated monetary policies worldwide to control increasing prices.

In February 2024, the CBK raised its policy rate to 13% from 12.5%, the largest jump in 12 years. This move is expected to lead to higher loan costs, impacting borrowers.

“The proposed action will ensure that inflationary expectations remain anchored while setting inflation on a firm downward path towards the five per cent midpoint of the target range, as well as addressing residual pressures on the exchange rate,” said Kamau Thugge, CBK governor, in a statement to the East African.

“The initiative aims to ensure adequate foreign currency liquidity in the market. In addition, it intends to ensure customers’ demands for foreign currency are met through licensed financial institutions at the prevailing market prices,” the statement read.

Traditionally, the central bank buys dollars, but with this announcement, it has changed tactics to sell dollars and looks forward to boosting market liquidity. The bank hopes to push individuals and businesses hoarding dollars to release and eliminate a parallel market (black market), which has worsened the dollar crisis in the East African country.

In 2023, the Bank of Tanzania reported a drop in foreign exchange reserves, decreasing from $5.5 billion in May 2022 to $4.9 billion in May 2023. However, the bank maintained that the situation was not dire. The bank noted that this decline was attributed to various global factors such as the COVID-19 pandemic, the Russia-Ukraine conflict, increased US interest rates, and climate change.

These global challenges have disrupted supply chains, leading to higher commodity prices worldwide. As a result, more US dollars are needed to import the same volume of goods as previously. 

In February 2024, the Bank of Tanzania launched a new series of treasury bond auctions to manage domestic debt and enhance money supply amidst foreign currency shortages. The bank reintroduced treasury bonds with maturities of 10, 15, 20, and 25 years by the close of the 2023/2024 fiscal year. 

The auction started with a 20-year bond on February 21, offering a 15.49% interest rate. Later, a 25-year bond at 15.95% interest was reissued on March 6. 

Tanzania is among several African nations struggling with foreign currency shortages alongside Kenya, Egypt, Zimbabwe, Nigeria, Ghana, and Zambia. Given the dollar’s predominant role in global transactions, these countries heavily depend on it to settle foreign debts and pay for essential goods and services.