An electric vehicle (EV) company in Malawi, one of the continent’s smallest and landlocked economies, is making groundbreaking efforts to electrify transportation in the country, which is also one of the poorest in the world.
Despite the challenges of raising capital in the African market, the dynamics of global supply chains, and the importance of local manufacturing in achieving a competitive advantage, Sanguo Ventures (SGV) is building new all-electric motorcycles from traditional motorcycles, solar batteries, and motorcycle parts, including a maintenance-free electric motor and control computer.
But not everything comes easy in this Southern African nation, where the minimum wage is less than $200 per month, while SGV’s bikes cost $2,800.
Today I am joined by Evan Liu, co-director of Sanguo Ventures or SGV, which manufactures and retrofits electric motorcycles, to help us unpack the challenges and opportunities in building mobility solutions for Malawians including how the company is managing to continue building the bikes and selling them at the price equivalent to almost two years of the average Malawian’s salary.
Show Notes:
- The China Global South Project: Startup in Malawi Bets on Chinese Tech to Power an EV Shift by Njenga Hakeenah
- ESI: Malawi: Electric motorbikes for mass roll out to be locally made by Yunus Kemp
- The China Global South Project: Youthful Technicians Building Malawi’s E-bikes Driven by Chinese Tech by Njenga Hakeenah
About Evan Liu:
Evan Liu is an American entrepreneur and supply chain specialist who co-founded Sanguo Ventures (SGV) in 2017 alongside Colin Sargent. The inception of SGV was inspired by an exploratory trip to Malawi, during which Liu and Sargent identified significant opportunities in the underdeveloped transportation sector. Beyond product development, Liu emphasizes the importance of building a sustainable ecosystem for electric mobility in Malawi. SGV has partnered with institutions like Don Bosco Youth Technical Institute and Lilongwe Technical College to offer apprenticeships, thereby cultivating a skilled workforce.
Transcript:
NJENGA HAKEENAH: So, hello and welcome to The Africa EV Show. And as always, my name is Njenga Hakena. And investing in Africa may feel like one of a thousand ways to die due to the various issues like policy terrain, needs evolution, in most cases, the lack of capital to fund ventures that may have really good ideas, but not the financial means to actualize them. Today we are zooming into Malawi, one of the continent’s smallest and landlocked economies.
where one company is making ground-breaking efforts to electrify transportation. SGV is building new all-electric motorcycles from traditional motorcycles, solar batteries and motorcycle parts, including a maintenance-free motor and control computer. SGV is also converting existing petrol motorcycles to all-electric, while also educating consumers and creating employment opportunities.
Last year, plans were announced to roll out 50,000 locally made motorbikes nationwide, that is in Malawi. And these bikes aren’t just imported technology, they are being assembled or even manufactured from the ground up in Malawi, involving local talent, entrepreneurs and battery systems experts. The initiative primarily aims to reduce fuel costs for commuters and stimulate job creation within the green tech sector.
In today’s episode, we’ll discuss, among others, Malawi’s mobility space focusing on e-bikes, how these e-motor bikes, or whatever you call them, as long as they’re electric, are being produced and deployed, and the challenges of raising capital in a sector that is consistently facing disruption and competition from different companies interested in a piece of the pie.
And to help us unpack all of this is Ivan Liu. He is the co-director of Sanguo Ventures and will refer to it as SGV from here on, which manufactures and retrofits electric motorcycles. SGV is a big part of the plan to provide the e-bikes in Malawi. Hello Liu and welcome to The Africa EV Show.
EVAN LIU: Thank you so much for having me in Njenga. I’m very excited about recent developments and also prospects of electric mobility technology and not only Malawi but also neighboring countries and not just because of the technology itself but really the practical opportunities and practical benefits that it actually offers to end users and to the market.
As we know, you know, energy and fuel challenges are some of the most, some of the largest issues facing Malawi in particular and also regional and neighboring countries. But I wanted to give a quick and brief background on Sanguo Ventures, SGV, myself and also my co-founder and director Colin Sargent, who unfortunately can’t be here with us today.
We originally founded SGV in 2017. We came to Malawi initially on an exploratory trip, actually with no particular agenda in mind. And we were stunned by the opportunity and almost the lack of knowledge from everyone else about Malawi. And we figured that it gave us a huge leverage in terms of first mover advantage. But also, what we’ve seen traditionally is that markets that have been underinvested in before do create arbitrage opportunities for those who are actually willing to go and do it first. So we incorporated SGV in late 2017 and before we actually went commercial into the market we did an initial 500,000 kilometer case study with our first electric motorcycles with our first partner and our first customer, Proteligent Security Services, which is one of Malawi’s largest security companies.
And it was during this two-year initial two-year case study where we actually proved that electric motorcycles in Malawi, if you combine fuel costs and maintenance costs, electric mobility actually costs one-eighth the cost per kilometer in comparison to combustion-powered motorcycles. So if you take those numbers and now you factor it over hundreds of thousands and millions of kilometers, that cost savings is very significant. So off of that, we were able to then secure our first seed investment from AfriCap in 2022, actually quite a few years later. And that allowed us to then bring in another round of inventory, which then allowed us to really expand our pilots and expand fleet adoption amongst existing pilot customers and also look at growing our corporate customer base.
We have since really adopted a B2B and a B2 kind of organizational and institutional customer business model. And so now we have customers in quite a few sectors, including some of the largest companies in the region. This includes the Lobo Sugar, DHL, Pixis, G4S, Moving Windmills, and Kumo and a lot of the microfinance organizations. Since then and off of the back and success and proving out the really operational and income and cost saving benefits of the technology, we were able to then now win several development grants, both with UNDP, specifically their Green Economic Transition Facility Program, also the Nordic Development Fund’s EEP Africa program as well. And that has allowed us to…
NJENGA: And I think before you go into who has funded and who you’re partnering with in terms of financing, I would want to understand how raising capital is like or raising funding is like for a company like yours in Africa. Because I know there are many out here who are trying to raise funds. And for you, it was 2017, making you probably the oldest or one of the oldest EV companies in Africa.
How is it like raising capital for a company like yours, whereby it’s big ideas, it’s big dreams, but probably very little to show for what you are thinking of doing?
LIU: Absolutely. Well, as you can see, you know, it’s it’s not easy, you know, from our start date in 2000 and August 2017 to 2022. That’s almost 40 years before we had been able to achieve initial seed investment. And one of the things that we’ve noticed is that it’s really the lack of knowledge, particularly from Western economies, you know, from the United States. Many people in the United States still frankly view the African markets, particularly countries like Malawi, as a destination for aid and charity rather than investment. And that has been a recurring mindset and issue I think that has plagued not only Malawi, but many, if not all of the countries in the region. Now we have seen a pretty significant shift in recent years, particularly in the last year or two.
I think that it’s a combination of several factors. think that both the several donor entities and development entities are starting to see the value of private sector engagement, which has been to our benefit. And I think quite a few other companies in Malawi’s benefit. Separately, the other interest and increase in interest from what we’ve seen in Western and European American based investment programs into Africa has been a combination of course the the actual business potential but also the geopolitical aspect of it, you know, we’ve been hearing now stories for the last decade of Chinese projects and Chinese companies and Chinese investors coming in and you know making money and developing companies and engaging in local infrastructure and networks.
I think that from a competitive point of view, I think that there has been a slight change in mindset from Western and European and American companies on the opportunities that are here. So I do think that, yes, it has been quite difficult, particularly at the beginning, but we do see a pretty significant shift now, at least in the last year, especially in interest in raising capital.
But it’s not to say that it’ll be easy going forward. It’s really not. And I don’t want people to get the wrong idea. But there are certainly more opportunities now than there were five, six, seven years ago.
NJENGA: I also think that in as much as we want funding to come from other countries, and we know that this has shifted forever. After Trump came in, funding for Africa from the US and other Western capitals has changed, maybe nonexistent in a few years to come. But I have a concern in that we have African entities, you know, big banks, you know, and all that. But they are kind of pussyfooting around funding local companies like yours or mine, if I had one. And it’s not like they don’t have the funding because you will find them doing other things that are costing, if you needed a million dollars, they have an, you know, a social, an ESG thing or what do call them whereby we are doing CSR, corporate social responsibility. Somebody is pouring all that money into something.
But when it comes to funding ventures, there is some kind of fear or unwillingness to. Have you had any experience with local funders?
LIU: So we have had several discussions, for example, with the African Development Bank. And from our understanding, at least as of current, some of these larger regional and local development bank and other financing institutions, their current mandates are more focused on intergovernmental or government to government, particularly for larger infrastructure.
projects, you know, for example, the new highways that are being built in Malawi and also the new hydroelectric dam that’s being in that’s in discussion at the moment. So from my understanding, their current mandate is more focused on larger both energy infrastructure, health and various forms of infrastructure platforms. However, we do think that eventually this will change.
And yes, we have seen quite a few various pilot feasibility.
grants and funding programs that are being offered by some of these banks. But again, from my understanding, the mandate has been mainly focused on the public sectors rather than the private sectors for some of these funding entities. I I hope that will change in the future, but at the moment, I actually understand why they have the mandate that they do.
They have their own obligations also set from their joint meetings together with World Bank and IMF and other development banks that are also jointly backing some of these projects. I do think, and I hate to sound like I’m beating a dead horse, but until their internal mandate changes, I don’t see really any direct private sector engagements, at least in the immediate horizon.
But, you know, we remain optimistic.
NJENGA: Yeah. Definitely optimism because you know, like in Africa you have to either be living or you’re living. Otherwise you’re gone. But let’s shift gears and look at your inputs and components being imported for China and what advised these moves?
LIU: The reality of global supply chain. just another quick background. I’m not an engineer myself. I am not a technician. I have only ever been a motor vehicle enthusiast in my professional and personal capacity. I like the Fast and Furious movies and I loved tinkering and playing around with cars and that kind of stuff.
My actual educational background is in supply chain management from Northeastern University. so our decision to go Chinese was the reality of the situation. From what we’ve seen, Chinese manufacturers and the Chinese market is the only country that has made the billions of dollars of investment in battery production technology and motor production technology and all of the back end infrastructure to create a good quality product for a relatively affordable price. We were asked to initially look at some US based suppliers for lithium batteries.
Well, if I were to buy a lithium battery, at least this was back in 2022, things may be a little bit different now, I doubt it. But at least in 2022, if I were going to buy my lithium battery from the US, I would have to charge something like $55,000 for my motorcycle. Because, you know, the US doesn’t make lithium batteries. The only lithium batteries they do make are for those pacemakers in the harp. And from what we’ve seen, even from a lot of these larger battery plants in Germany and the United States, the actual cells themselves are being manufactured in China and the configuration and package and final stamping is happening either in Germany or the United States. And so the decision to go for Chinese-made components was number one acknowledgement that the African market is a highly price sensitive market.
So you have to be able to deliver a solution for a relatively affordable price. And the other reality is that the Chinese market is the only one that has made the necessary investments to create the infrastructure and create a production capability and capacity of something relatively pretty good quality and for a relatively reasonable price.
NJENGA: Nice. And I think in terms of like affordability, no one is beating China anytime soon because they have kind of made it out, set it out in such a way that for whoever, for whatever price, there is something for you. Absolutely.
LIU: No, no, absolutely not.
Absolutely, right. It’s at the end of the day you get what you pay for and if you’re willing to pay a little bit more like what we do for lithium batteries. You can get a very very good Quality product. I mean just to give you an idea The very first electric motorcycle that we deployed on the road Actually in 2019 is still running on the same battery and it’s got that motorcycles probably got about 180,000 kilometers now on the odometer and yeah you know you get what you pay for and and also…
NJENGA: You get what you pay for.
LIU: The fact is, is the quality is there, the warranty is there and the backup is there. See, Chinese batteries actually have made us confident to provide a full three year warranty on our electric drivetrain and also a five year warranty going forward for our new electric pickups. We are that confident in the quality of current batteries that we are going ahead and offering a very substantial warranty on our products. So, and yeah, they made the necessary investments in the quality and production techniques and infrastructure.
NJENGA: Yeah. And you’ve mentioned that this is a kind of a diversion, but we are coming back to the main road. We have just taken a detour. You mentioned that you’re bringing in these trucks from China, right? Are they fully built from China or in China? And then you bring in full complete units or are you assembling them locally or what’s what’s the idea?
LIU: Well, we are actually going through the same philosophical process like what we did with our motorcycles. At the end of the day, we consider ourselves a, even though, yes, we’re in tech and new technologies and a lot of exciting new things, but at the end of the day, we are still a traditional automotive company. And so the philosophy we’re developing with the trucks is the same with what we’ve done with the motorcycles.
Yes, the first pilot units we did bring in kind of fully assembled and then we will we effectively strip it down to its bare metal and start training on the reassembly. And then after several iterations, then all of our new motorcycles are now fully assembled in Malawi. Same idea for the pickups. These pickup trucks were custom ordered to spec to accommodate the Malawian market, know, right-hand drive, 15-inch tires, a slightly lifted suspension, a more powerful battery and motor to accommodate the road conditions and environment. And then what we’re going to do is strip it down to the bare metal and start looking at which components can be substituted locally.
And also like what we’ve done with the motorcycles, take the chassis battery and bottom at motor and the kind of bottom and platform and see if we can transplant it directly onto other platforms such as minibuses for conversion or these light, you know, these Daihatsu mini trucks and things like that. Because at the end of the day, you know, why, why even consider electric mobility? You know, why, why is anyone considering electric mobility? Why should anyone consider electric mobility? And it’s because the cost per kilometer is significantly lower than that of combustion. And so if we’re looking at applications of electric mobility, particularly for utility purposes, whether for businesses, whether for bus drivers and taxis and organizations, it’s really about the bottom line. So by adopting a traditional automotive approach, it allows us to then develop the skill sets needed to maintain the vehicles.
And that’s what we have found is super, super critical. And this has been a story that’s very common in Malawi.
There’s a new motorcycle store that opens or a new secondhand vehicle dealership. They sell you the product and then after several months, something breaks. And then you go back to the person who sold it to you, but they don’t keep any spares in stock. And now you’re left on your own. And so one of the key things we adopted and implemented and will continue to implement is keeping this backup and warranty spare parts so that no matter what happens, our clients and users can always come back to us for warranty services, repairs and maintenance. Because in order for you to have a reliable automotive company, you have to have your products on the road. And they can’t be on the road if they’re in the workshop waiting to be repaired.
NJENGA: Absolutely. That’s true. That’s true. And do you mind telling us who your manufacturer is? Or is that under wraps?
LIU: Yes, I’m happy to. So for the pickup trucks, it’s a company called Kunming Passenger Automobile Company. They actually are also a major manufacturer for a dealership also in California, albeit much different specifications and left-hand drive. And they also do chassis fabrication and also platform fabrication for larger automotive manufacturers such as BYD and SAIC. So they make custom lorry beds for some of these larger manufacturers as well.
NJENGA: And that’s a really interesting intertwine there.
LIU: Yes, absolutely. listen, what we found is also, know, the batteries, for example, you know, these EV batteries, if you actually go and dig into a little bit of the backend, you’ll find that the original cells, you know, 80, if not 90 % of the original cells are all manufactured from usually one of three major plants. If you actually go through the, you know, through the, little bit of investigation and, you know. And this is to the credit and like what we mentioned earlier, the infrastructure and the production infrastructure for batteries in China is just, it’s astonishing really. And they’ve set up these enormous giga plants.
And so yeah, if you actually do a little ticking, you’ll find that the original cell manufacturers are usually coming from one of three different places and they’re all going to your BYD, Tesla, they’re going to you know VW and they’re going to little guys such as ourselves as well.
NJENGA: Absolutely. And looking at that, and because we cannot replicate anything Chinese here ever, how has local manufacturing shaped your competitive advantage in comparison to the Chinese assembled import or regional EV startups?
LIU: Well, here’s, know, this is where I actually would like to disagree a little bit. I’ve already started to see the infancy of local battery assembly here in, we’ve actually done a little bit ourselves. And I think that yes, it’s, you know, we will not see the, you know, production from raw material to final product to the same capacity.
However, I do see large opportunities going forward, particularly with a little bit of skills development and skills training, that batteries can be assembled locally through manual procedures and can be assembled reliably so long as the training and the backup is there. And it’ll happen eventually. We’ve done a little bit ourselves just, you know, for a bit of training and kind of fun.
But we’ve also seen some other solar companies, both Kenya, I believe, and also in Malawi, that are actually bringing in their 18650 cells that have the, it’s basically just a screw and a bolt at the top and then using the strips to configure and assemble these batteries. And we’re already starting to see that. And I do think in the coming years, as you know, they get more experience and becomes more viable, we will see more and more of that.
Sorry, I did get a little sidetracked. I may have forgotten your original question.
NJENGA: I was asking about, you know, like when it comes to local, the advantages of manufacturing locally. But I think you have also mentioned that in that, you know, there are the cut costs or reduced costs and things like that. And also the fact that we can ever, we can do some bits of it, but we can never get to the scale of what Chinese, the Chinese have done so far.
LIU: Absolutely. Well, I could just answer and it’s actually similar to what I said earlier. The real advantage of local assembly, local manufacturing, local anything is the skills development and the leapfrogging of skills development from it. Right. One of our mandates as a company. we have a I mean, I know this this is one of your questions later on, but I may as well jump into it because we’re on the topic.
We have direct partnerships with Don Bosco Youth Technical Institute and the Lilongwe Technical College both in education, apprenticeship and training. This and investment in human capital and skills development is to us one of the most critical aspects of starting business, of investing and of any form of enterprise in Africa, whether Malawi or anywhere in neighboring countries. So as a result, actually have a direct partnerships, established direct partnerships with these various technical institutions to and we also have a privately developed joint technical certification program on EV maintenance, repair and assembly with the automotive repair division of the technical institution and because for us there is nothing that drives growth and spurs confidence in both a product than knowing that it’s being backed up.
And you can only back it up if you have a pool of trained, bright, young technicians, you know, able to service it, able to back it up and who understand the technology and the ins and outs. And so for us, the real advantage of the local assembly is the skills development part because then that actually helps back up our long-term and broader growth plans as well.
NJENGA: And this, yeah, and I think this leads us to the next question that I had in terms of like your team composition in terms of expertise. Is it all local? Is it mixed up? Like there are foreign nationalities or in, yeah.
LIU: So aside from myself and my co-founder Colin, for the people who are on the ground here in Malawi, myself and Colin are the only non-Malawians on our team I would say, yeah. And of course, there’s Garrett, who is our current chair of the board. He’s based in Houston. But in terms of our local team, I think now a total of 42 employees. Aside from myself and my co-founder, and also in management, it is all local Malawians.
In fact, some of whom who have almost 50 years of experience actually in the automotive trade. Yeah, we did a lot of poaching of talent when we got here because, you know, for us, was a critical part and we would not be where we were now without the talent that we were able to secure in order to train the young technicians. mean, right now, if I were to take the average age of our workshop floor and assembly floor technicians, it’s probably what about 24 years old, 20, 25, 24 years old. Mean.
Many of them are freshly graduated from technical college or are actually still in school. And we are helping sponsor their apprenticeship and also some of the education. You know, that’s a critical part. And yeah, you know, we’re not doing this out of the kindness of our hearts. We are doing it because it is actually imperative and critical for an automotive company to be able to have a trained workforce to be able to service.
And this also allows us because we now have clients and motorbikes out in all over the country now in Malawi. In fact, some in very, very remote areas. And this also allows us to provide remote technical backup and repair services, whether it’s through a WhatsApp or sending one of our technicians physically to the site and conduct warranty and repairs. so, yeah, it’s mostly local Malawians and we are really proud of the team that we’ve been able to build.
NJENGA: That’s great. How many, how many, how many staff do you have?
LIU: A total of now, I would say, 32 full-time staff and then 10 apprentices through Don Bosco Technical Youth Institute. And what I hope is, and really what our program goes is, in the technical training and technical education system in Malawi, they have to go through, I guess, level one, level two, and level three of their qualifications and certifications.
But they also need to have an attachment as an apprentice with a, you know, whether it’s a governmental body or a private company or an in-house workshop somewhere, they need to also complete a formal attachment. It’s kind of like a co-op or internship of sorts in order to proceed for that qualification. So we provide that attachment and apprenticeship program and then also so, you know, depending on their interests, we actually do extend a formal full-time job offer for those who have fully graduated from the technical college and also completed our apprenticeship program as well.
NJENGA: And that sounds like you guys will be expanding once you have kind of established yourselves in your first space, you have to expand. But let’s look at the kind of mileage you guys have done. 5 million already, and there are no warranty claims on your flagship SGV150 model.
LIU: Absolutely.
NJENGA: What are the lessons that others can learn from your experience? Because we know that the African investment space is very harsh in terms of the terrain and also operational conditions.
LIU: Absolutely. mean, I think number one, and one of the things that of course, and I don’t think this is entirely true in terms of viewpoints from outsiders. Obviously being fully transparent is one of the key things that really generates confidence and interest in you as a private company from outside investing entities.
I don’t think that needs to be said. think everybody understands that because I do think that there’s often a negative perception attached with various development projects. And frankly, that’s one of the things that I know that the Trump administration focused on, even though I think many, myself included, do not entirely agree with in terms of what of the justifications and pulling back funding. know, number one being fully transparent.
But, you know, in order for us to have achieved five million kilometers on the road with our products, number one is you have to identify a quality supplier quality inputs, right? You know, just because the price, you know, it’s the lowest price, it’s not going to, you know, you’re not always going to benefit. We actually pay about 40 % more than I think some other people do for our motorcycles, because we really want to be sure that our batteries have a we know that minimum, they will be able to go through 2500 to 3000 full discharge and charge cycles before it before it drops down to 80 % capacity.
We want to know that our motors are maintenance free and fully sealed and brushless so that when customers are out in the field they know that they won’t have to you know worry about water or or dust or you know the bearings going or the brushes going on the motor.
The other part of it, which is what we mentioned is having the full backup in place, right? We’re not here just to buy a product, buy inputs for X price and then sell it to you for Y price and then say, thank you very much. You’re on your own now. We have to be here to back up our products. And the only way we were able to achieve that as well is to actually make that investment in the skills and infrastructure development. And another thing that we’ve done as is the investments in our charging stations.
I know we’ve, I may have briefly covered it in our prior conversation, but we do have a partnership with now Total Energies. And we have the first three pilot publicly accessible charging stations available in Le Longue, with a medium to long-term plan to actually expand charging stations at, depending on EV density, but hopefully, at all of the Total Energies filling stations in Malawi and as we eventually expand into neighboring countries at their filling stations as well. And so also providing that backup infrastructure, right? Because you go to Shenzhen, this technology is nothing new. I mean, see it’s half the vehicles in Shenzhen now are electric and it’s astonishing. It’s so quiet.
But for Malawi and other African countries, it is still very much a new technology, Confidence may not be there yet, particularly in, you know, especially with range anxiety. You know, people often ask, you know, well, you know, we have load shedding all the time, you know, why go and get an electric? And so the other part is, actually developing and offering solutions that are able to charge on minimal infrastructure. And I think that’s also been key to our success as well. And I think will be key to success for anyone else in the e-mobility sector, right?
I know a lot of people are looking at the fancy Teslas and the fancy VWs and some of these other fancier EVs. And the reality is, is if your local transformer is only 40 kVA, and your fast charger is 80 kVA, it really doesn’t make sense to get one of these more robust and fancier EVs that require a significantly heavier infrastructure back-end requirement. all of our, and even our pickups, our electric motorcycles, our three-wheelers, and our planned pickups can just plug and charge anywhere.
And I think that’s going to be a great advantage to ourselves and really anybody else in the space, because you have to be able to account for, you have to be able to go anywhere, plug it in and know that you’re going to be able to get a little bit of charge. So. And right, and not not worrying about damaging or frying somebody’s circuit board.
NJENGA: Nice. And not worry about getting lost or leaving your home. Yeah. That’s true. And by the way, how much is the SGBike?
LIU: So we are selling our bike brand new with a three year warranty with the battery for less than for $2,800.
NJENGA: Hmm. Okay. All right. And do you have a financing arrangement for people? Because we know sometimes, because that’s, that’s enormous for like, if an individual came and said, I want this bike. because I know you’re dealing a lot with institutions, but if an individual comes, do you have financing arrangement with financing organizations to help them acquire it?
LIU: Yes, so we have actually established a what we call an in-house and partners financing program. what we call it, and it’s basically the, we call it the Kabaza program. Kabaza in Chichewa is, know, it’s like Boda Boda in East Africa. It refers to motorcycle taxi. And so we have a in-house financing program that we have developed together with Don Bosco Youth Tech Institute. So it is actually currently being offered only to those who are qualified and also graduates of Don Bosco as well because it’s it’s a risk mitigation factor.
And we actually rolled it out the initial pilot back in October and are now seeing some pretty good success from the initial pilot and are now in the process of expanding it. But for creating financing solutions for the broader general market, we are in discussions right now with various financing entities, both microfinance organizations and commercial banks financing institutions. And the reason for this is that, and like what I said, know, yeah, eventually, I would love to be a bank one day. But right now, our core competency is still, you know, on the automotive side, we are not a financing company, and nor do I want to pretend that I have any background in banking and finance. So and for risk mitigation, and also, you know, customer qualification, and you know, and the sorts of things.
We are in discussions right now with commercial banks. And one of the unique programs that we’re talking about is that because our products don’t use fuel, and they don’t have maintenance costs. And so there is a quite easily quantifiable and numerical measurement of cost savings that the end user will be able to experience every single month. For the commercial bank to actually offer a
special discounted interest rate for our products and products like ours because there’s not a in operational cost or significantly higher operational cost attached to it. So if we’re able to get that one through the finish line, I actually can say openly because we do have the communications in writing now, both First Capital Bank here in Malawi and also NBS Bank have both expressed significant interest in developing this unique financing program.
But yes, I do think that in order for us to roll out this financing arrangement to a broader market, yeah, it will require the assistance and partnership from a local brick and mortar finance institution, such as a bank. But if we are able to do that, then yes, the market base for electric mobility is now gone from the thousands per year to the tens of thousands per year, most certainly. But then of course, you know, then you have to be able to come up with also creative qualification mechanisms, right? See, for example, the average Kabaza motorcycle taxi operator in Malawi, he is, he’s unbanked. He doesn’t have a bank account. He doesn’t own any assets.
However, it is clear that he does have a clear, what do call, revenue, income generation model because he doesn’t own his current motorcycle. Very often he is paying to lease that motorcycle from a larger fleet operator. You we can get into the the details of the ownership of those fleets privately. You know it’s usually owned by the police or you know that the you know know a member of parliament or something like that but that he has to rent that motorcycle from a larger fleet operator for say 10,000 Kwacha. And then he’s got to put another 10 to 15,000 Kwacha fuel into the motorcycle. And then he may make 25,000 Kwacha of rides, 30,000 Kwacha of rides during the day. And yeah, he’s going home with maybe 5,000, maybe 10,000.
But what we found for our electric motorcycle taxi operators is they’re now going home with 25,000, 30,000, up to 30,000 Kwacha take home in their pockets because they’re not having to put out 10, 15,000 of fuel every single day. Then on top of that, I’m sure you’ve seen on the news, Malawi has been having massive fuel shortages. Enormous, enormous and we’re actually in the middle of one right now. know, fuel queues, panic buying and of course the worst part is the black, you know, a lot of these guys are being forced to buy the black market rates and they’re paying three times often three times the pump price for the black market.
So that drives up their costs even further. So if the commercial banks and the whole reason for going into this rant is if commercial banks are able to qualify and somehow qualify some of these metrics from a lot of these unbanked customers, right, because they’re clearly generating income. They’re clearly having a daily expenditure of maybe even 25, 30,000 quatsha per day, then they can prove, we can prove that these guys, even though they’re unbanked and they may not have traditional assets and qualifications in the ways that commercial banks look at, these guys can still qualify for these financing arrangements so long as you implement certain enforcement mechanisms, right? Tracking devices, remote interlocks and shut off.
Of course, that all has to be part of the procedure, right? You have to be able to remotely shut the bike off and repossess it if needed. However, these are all unique arrangements that we’re all looking at to be able to now expand the base that would actually benefit from the cost saving measurements of electric mobility from the thousands per year to the tens if not hundreds of thousands per year.
NJENGA: Yeah. And it’s interesting that the black market fuel industry thrives in such economies like, you know, in Africa. the fact that the people who are electrified don’t have to worry about that. I know everybody wants to electrify at this point in Malawi. But anyway, that is how nature is and how life is. But I remember we were speaking a few days ago and about how you had to go and, you know, do the paperwork for the EVs because it’s not there, like policy is not there. And as African countries are building their EV ecosystems, including the battery suppliers, the swapping stations, the tech certifications, what role do you see or does SGV imagine playing beyond producing motorcycles? And how do you see opportunity? In terms of formulating policy.
LIU: So we have a general philosophy of the policy changes are the cherry on top in the sense that we, when developing both our business model, both for rather initially expansion into private and public markets, is that if you are reliant on policy changes and policy in order for your project to be successful, it won’t be successful in the first place.
And so everything we have done was off the basis of, yes, we have to be able to make it work regardless of policy change factors. However, if policy change, but also this is not to say to keep quiet and to not have any form of engagement. The whole time, you know, we had been constantly engaging both, for example, with Ministry of Finance, Malawi Ministry of finance, road traffic, doing demonstrations and doing technical demos and a whole arrangement of different sorts of things. And that really is able to plant certain seeds in the policy sector.
When we first came to Malawi, for example, EVs had a four wheel electric vehicles had a hundred and fourteen percent cumulative import duty and electric motorcycles had an eighty four percent cumulative duty including VAT on these products which really made the yes initial growth kind of slow. However as of two years ago Malawi government through some of our direct engagements yes after more than four years lifted the duties import duties on electric vehicles and electric motorcycles and electric three-wheelers.
They’re still VAT, but that’s all right. know VAT is VAT, know We’ll live with it and similarly with industrial rebates as well. There’s a lot of provisions and policy there in place for industrial rebate and for industrial companies such as ours in order to take advantage of and qualify however, we don’t rely on the idea that we’ll get it because See at the end of the day from what we’ve actually seen, the policy is actually there. Even at road traffic in terms of registration of electric vehicles and electric motorcycles, the policy has already been developed and it’s all just based on the original road traffic act and registration policies of, know, because an electric motorcycle, if it’s got a certain chassis and carrying capacity is still a motorcycle. It’s got two wheels. It’s got a motor. It’s got bearings. It’s got brakes and it’s got a throttle. Similarly with electric vehicles.
On the policy side, according to road traffic in Malawi, the policy is in place. It is still a four-wheeled vehicle with an axle, with four tires, with a propulsion system, and therefore technically can be able to be registered. And we’ve successfully been able to register our electric motorcycles as brand new electric motorcycles and or the SGV brand name.
However, that did take several years and several tries to actually get it pushed through the system. So now we’re doing the same thing for the first time for the four wheel electric vehicles.
So, yes, it’s a procedure and it’s a step. We do see that the policy is already in place. However, many times there may be an unfamiliar internally that the policy has been in place because there hasn’t been a specific training workshop or a policy direction workshop hosted by for example road traffic and by some of these you know external entities as well but you know as we go along and expand yeah the policy direction I think is there both the the policy that’s already been implemented on the ground and the policy that is under discussion.
However, what I do see is that needs to have a little more encouragement is maybe the actual engagement on that policy from the various stakeholders so that everybody is of the understanding and familiar that a lot of it’s already in place so we now just need to figure out what the what the you know most efficient and correct way of enforcing it is and rolling it out is…
NJENGA: All right. And wow, it’s interesting seeing how some of these African countries are formulating policies as they go, because most of whatever has been, like even in Kenya, is what was left way back, you know, what was formulated like 20 years ago before we had the visa on the roads.
LIU: Absolutely, yes.
NJENGA: So it’s interesting that some of these formulations are happening as we go along. But let’s now talk competition and Africa’s giant phone maker and seller, Transion. They are the ones behind the Techno, Infinix and iTel phones. They are planning on becoming the leading e-bike company by next year through their Tangvolt e-bikes. And bearing in mind the financial muscle that this company has and also the kind of granular understanding of the African consumer through their mobile phone distribution.
How do you see this affecting the motorbike sector in Malawi and across Africa?
LIU: So, you know, even till now, us as SGV, we still remain the really the sole provider of e-mobility solutions and warranty services in Malawi. We’re starting to see a few competitors in the four wheel space. But at the end of the day, we are still the sole provider of, you know, with backup services. And also, you know, I think Malawi now has what 300 EVs, more than 300 EVs total, of which our products make up about 290 of them, if not more. however, we also are not naive. We can’t be the big fish in the little pond forever, right? We can’t be a monopoly and we can’t have a captured market forever.
Yes, it is inevitable that eventually larger e-mobility companies, particularly with more financial backing and things will come in and may likely offer solutions for a much cheaper price and better financing solutions because they have the capital to back it up. However, yes, that for the mass market, can’t see ourselves as the sole provider of electric mobility solutions forever for the mass market. However, because of the backup and maintenance and repair confidence and infrastructure that we have built up amongst our B2B and B2 organizational clients over the last few years, we are very confident that we still will have a pretty significant foot in the door in that sector.
Similarly, from what we’ve seen as well, other people have imported their own electric motorcycles, whether privately or their own three-wheelers and their own, also UNDP for example, they bought their own electric vehicle from South Africa. And what we have found is that when something goes wrong, it ends up at our workshop, even though it wasn’t bought from us. So that’s why we are confident that despite the uptake in competition, of course it’s inevitable that our brand SGV will still remain a significant player regionally because we have built our name on the backup capacity and the ability to make sure that, all right, something on the bike after I used it, I took it to SGV and they had it back to me by the end of the day.
That is something that we have really prided ourselves on and I think that if other competitors are going want to come in in a big way, they are going to need to make that capital investment both in their in their workforce and their skills training because Malawi is not an easy terrain and environment to operate a motor vehicle on whether a two wheel, three wheel or four wheel. You know we find somebody buys a brand new Land Cruiser, you know, and then hits a pothole going 100 kilometers and then boom, their drag link is broken already, even though it’s only got 200 kilometers on the odometer.
These are the things that you have to be accounting for when implementing automotive solutions in the Malawi market. yes, I think any competition that wants to come in in this space must be cognizant and must be aware that they must develop that back end infrastructure in the skills training. Otherwise, their products will be dropping like flies left, right and center.
NJENGA: Wow, thank you so much, Liu, for your time today. Thank you for the insights, especially on policy, the infrastructure that needs to be availed or provided for the EV space to thrive in Malawi.
And also the fact that you guys are diversifying into other spaces. All the best and we look forward to seeing what you guys come up with.
LIU: Absolutely and you know thank you I really appreciate your time and number one also the shifting and changing of accommodations I appreciate that and really look forward to continuing our engagement and you know really happy to share updates as we go along and so thank you so much for your time Njenga I appreciate it.
NJENGA: Absolutely. You’re welcome.
And guys, that brings us to the end of today’s deep dive into Malawi’s electric mobility transformation led in no small part by SGB and their bold vision for locally made all electric motorcycles. And now you’ve heard they have gotten into the four wheeler space. They have been in the three wheeler space as well. And from converting traditional bikes into high performance EVs to training technicians and scaling solar charging infrastructure, SGV is not just building bikes, they are building a new industry driven by African immobility needs and innovation suitable for the terrain.
There are so many potholes, like Ivan said, geographically and policy wise. So a huge thank you to you, Ivan, for joining us and sharing insights on what it really takes to build a clean tech company from the ground up in Africa.
Now, we are an independent journalism platform and by subscribing, sharing, and even talking to your friends about us, you help us continue to do what we do. So please, if you enjoyed this conversation and want to keep up with the people and ideas who are making things happen by powering the continent’s green transport future, be sure to like, subscribe, and hit that notification button. It’s a bell so you don’t miss a single episode that we produce.
My name is Njenga Hakeenah and this has been The Africa EV Show. See you next time when we spotlight yet another great innovation in the African immobility space. Have a wonderful one.
