EMOBILITY: “Empowering a platform for entrepreneurs to benefit from lower operating costs of EVs compared to ICEs, without having to pay the upfront capex”

Exclusive interview with Jonathan Green, Chief Financial Officer and Co-Founder of BasiGo. Jonathan is part of the project pitch session at the upcoming Africa’s Green Economy Summit in Cape Town in February 2024.

Let’s start with some background on you and how BasiGo started?
I’m originally from the UK. I studied maths, development and sustainable development and moved to East Africa in 2010 to work on technology adoption at the intersection of livelihoods and climates. I’ve worked in everything from encouraging smallholder farmers to use agricultural inputs, cook stove deployment, solar home systems, and now electric buses. At the centre of a lot of these technologies, we really see improvements in climate outcomes, very, very commonly improvements in health outcomes, from not having to inhale smoke, etc., and then long-term economic benefits, because the renewable technology often is long term and much more affordable than the ICE comparable. Unfortunately, a lot of these green technologies have a much higher upfront cost, which really inhibits adoption, and my career has really been focusing on trying how to reduce these barriers.

I met my co-founder Jit Bhattacharya at a company called Phoenix based in Uganda that distributed about a million solar systems to off-grid customers using a pay-as-you-go financing model. And when Jit and I reconnected, having both left the company during the COVID-19 here in Nairobi, we were commenting on how clean the air was because everyone was staying at home and noticing really how it was a lot of the public transport buses here that cause a lot of the air pollution from the internal combustion smoke. And we thought, could there be a way, for example, for us to create a business model like solar home systems that would enable bus operators to adopt electric buses versus diesel buses and still be able to benefit from that long-term cost of ownership without having a higher upfront cost?

So, that was kind of the genesis of the model of how BasiGo started by really looking to address the barriers of electric vehicle adoption.

What technology are you using?
We’re actually using off-the-shelf technology from China, typically. So, proven electric buses that have been in operation in hundreds of countries throughout the world. We do make a few small modifications, such as seating position, door position and ride height, to match the local conditions. Obviously we right size the engine motor to ensure that it can deal with the daily use requirements of the transport, whether that’s driving 200 kilometres per day or driving up hills with a 12% gradient like we have in Kigali. We manage our pay-as-you-drive leases via an in-house asset management platform that we call PAYD. On that platform, our lessees can see how their e-bus is performing, where it is, what revenue they’ve created, what their expenses are. So effectively, it is a mini P&L and cash flow statement, which helps them better manage their business. We use the device to see how all of our assets are performing, both in terms of managing costs, revenue, and battery life, etc. Our investors can also access the platform to understand the buses that they’ve financed, how well they’re performing and how the cash flows are servicing the loans.

How has this organisation changed people’s lives?
I’d say in terms of how our technology has changed people’s lives is that there’s an awful amount of excitement about the transition to electric mobility here in Kenya and I would say throughout Africa as well. The main thing is I think it’s providing the opportunity for bus operators who have previously had no choice but to use diesel to be able to integrate electric vehicles into their fleets such that their customers can ride on larger, more comfortable, quieter, less fumey buses, while the bus operators can actually make a higher net income by charging the passengers the same fare due to the lower opex of our buses. And then anyone who’s not riding the bus, as these buses drive past you, you’re no longer getting choked by black exhaust. So, I think it’s hopefully a benefit for not just the bus owners and the commuters, but also the city of Nairobi as a whole.

What is your vision for emobility?
My vision for emobility, and I think speaking more specifically around kind of commercial private vehicle fleets, is that we would like to empower a platform such that any entrepreneur can benefit from a lower total operating cost of an electric vehicle compared to an ICE, without having to pay the upfront capex. Our belief is that by doing this and ensuring that the infrastructure is there to charge and service these buses will really radically accelerate the adoption of these technologies and address the climate crisis.

The green economy is meant to create many jobs, especially for young people. How can the continent’s youth be made to feel part of the green economy future in your view?
In terms of providing jobs for the youth, I think my thoughts here are that a transition to a green economy is going to mean that many new technologies and skills are going to be required to affect such change. I’ve got a few grey hairs and I think what I’ve learned is that I was much better at learning and applying these new skills when I was younger than I am today. But I really think that the youth are going to be so important to figure out how we transition from ICE models to green technology models, because everything from how we think about refuelling our vehicles, given that putting gas in your tank takes three minutes, whereas charging your vehicle takes 30 minutes or more, it’s really going to change the paradigm of how we think about using vehicles and charging and servicing them. So, I think the youth are going to be a key part in helping us realise that change.

What can governments be doing with regards to enabling green economy investment and job creation?
In terms of what governments can do to support the adoption of emobility in particular, to support an enabling environment for green investment, is that, as I mentioned earlier, a lot of these technologies have clear environmental impacts, health impacts, as well as long-term profitability impacts for the end users plus the consumers.

If you actually put a value to all three of those, I think that can be a really strong case for government to support with more encouraging policies, for example, potentially around tax, potentially around standards, to accelerate the adoption of these technologies that I believe can actually pay off in the long term in terms of increased tax revenues for governments. And so I think my recommendation to government would be to actually do the work and actually perform the analysis to really understand how potentially, for example, something like a subsidy to encourage the adoption of buses could actually have financial benefits in terms of reduced spending on healthcare and actually maybe improved corporate income tax from higher operator margins.

What are the main challenges in your view?
In terms of the main challenges, we think that every market is different, and we’ve experienced this from having operations now in Kenya and Rwanda. So everything from government policies, perception around costs and reliability of electric vehicles, grid reliability, land cost, they’re all different and they all present their own unique challenges. But one common thread across all markets is that given the capital intensity of our business where we have to procure these e-bus assets upfront and then we lease them over an eight-year period, we can recover our capital fairly slowly, is that high cost of capital and currency and stability, especially if we’re borrowing in hard currency and where our revenues are in local currency can create a challenge with debt service, which, we need to really scale the business and address these climate issues.

What keeps you excited about this industry?
What keeps me so excited about the transition to green mobility is that it’s, first off, a really impactful sector to be in. You can clearly see and measure the environmental impacts as well as the health impacts vis-a-vis CO2 and other pollutants like NOx and PM2.5. But when we look at the kind of sector that we’re in, which is really public transport right now, it’s such a key part and a linchpin to the general growth of the economies in sub-Saharan African cities. I mean, everyone needs public transport to get to work. So it’s really such a key part in helping the economy develop generally.

Entrepreneurship is so important for the future of the continent’s economic growth. Do you have any advice for other green entrepreneurs?
If I was to give some advice to some other green entrepreneurs, I think it’s that especially in this kind of market right now, where in particular the VC markets are somewhat down, is that raising capital is really hard. There are lots of companies trying to raise money. There’s a lot of noise for investors to choose from. And so I think it’s really important to try and build business models that can actually reach scale. That’s one of the main criteria that investors, particularly VC investors, look for, and that they really can create high growth and large commercial returns. So if you can’t do that, then it’s obviously much harder to attract that kind of investment.

You are part of the project pitch session at the upcoming Africa’s Green Economy Summit in Cape Town in February 2024. What will be your message at the event?
My message at Africa’s Green Economy Summit is going to be that investing in the transition to emobility can not only improve climate, can improve air quality and health outcomes, and also improve the infrastructure of our public transport services and make them more resilient to fossil fuel shocks. There’s also a clear demonstrated path that it can create commercially attractive IRRs for investors both on the debt and equity side.

How important is such an event for the continent in your view?
Yes, this event is really important. I’m really, really thrilled to be visiting Cape Town again, such a wonderful city. And I’m really keen to connect with entrepreneurs who are facing similar challenges and also to network with investors who are looking to invest in the change to emobility in our cities across sub-Saharan Africa.