The shift towards sustainable public transportation in Africa, particularly the adoption of electric vehicles (EVs), represents both a challenge and an opportunity for the continent. With the global climate crisis escalating and urban populations rapidly growing, Africa faces an urgent need to modernize its transport infrastructure. However, the pathway to achieving this transformation is complex, especially considering the substantial financial investment required and the uneven distribution of resources across the continent.
In this context, three key factors are shaping Africa’s public transport funding outlook: the continent’s readiness for an electric vehicle (EV) revolution, the UK’s perspective on supporting Africa’s transition to low-carbon transport, and the broader funding outlook for public transport projects. While Africa’s ambitious plans to adopt EVs are critical to reducing emissions and improving urban air quality, they are met with significant financial and infrastructure hurdles. The UK’s ongoing efforts to provide funding and expertise through initiatives like public-private partnerships (PPPs) and climate-focused programs
underscore its commitment to supporting Africa’s green growth.
Yet, the funding shortfall remains a considerable challenge, as governments, multilateral development banks, and the private sector must work together to bridge this gap. The following sections explore Africa’s readiness for EV adoption, the UK’s role in supporting this shift, and the current landscape of public transport funding, with an emphasis on innovative financial models and the need for equitable distribution of resources across African cities.
Public transport projects across Africa and other developing regions are struggling with a significant funding gap. As urbanization rapidly increases, so does the need for improved, efficient, and sustainable transport infrastructure. One of the most promising solutions to bridge this funding gap is through Public-Private Partnerships (PPPs), where private sector resources and expertise are leveraged to develop and manage public infrastructure.
PPPs provide a useful avenue for governments to access additional capital as well as technical expertise in the private sector to meet the very substantial demand from their populations for new and expanded transportation infrastructure in the coming decades. To ensure these projects provide value for money, governments and stakeholders must carefully balance the risks and benefits, ensuring that private sector participation leads to optimized outcomes in terms of efficiency, service quality, and long-term sustainability.
Resource mobilization is key to filling the funding gap in public transport projects. One effective strategy is to blend various funding sources including government budgets, private capital, and climate finance from organizations like the Green Climate Fund (GCF) and the African Development Bank (AfDB).
Additionally, public-private partnerships can attract significant private investment, easing the financial burden on governments. Creating an enabling environment through favorable regulations, tax breaks, and government guarantees can further encourage private-sector participation. This, combined with innovative mechanisms such as land-value capture, can provide a continuous revenue stream to fund public transport projects.
A key principle of PPPs is the allocation of risks between the public and private sectors. Effective risk allocation ensures that each party manages the risks they are best equipped to handle. For example, the public sector may be better suited to handle political and regulatory risks, while the private sector can take on operational and financial risks related to construction and service delivery. Proper risk allocation ensures the project remains on track and prevents cost overruns and project delays.
By leveraging the private sector’s ability to mitigate construction, delivery and operating risks and access finance through mechanisms such as long-term debt financing or risk-sharing contracts — governments can limit the burden on public resources while maximizing service delivery. At the same time, private partners can benefit from structured revenue models, such as user fees, public subsidies, or advertising revenue, which ensure a return on investment.
To bridge the funding gap in public transport through Public-Private Partnerships (PPPs),
governments must focus on clear policy and regulatory frameworks. These frameworks ensure transparency and provide long-term stability for investors, which is crucial in attracting private sector involvement. By designing contracts with performance-based incentives, both public and private sectors are encouraged to deliver efficient and sustainable services. This helps maximize results from investments by ensuring that operators are accountable for the quality and reliability of public transport.
Businesses can significantly contribute to public transport not only through financing but also by managing operations and introducing innovative technologies. For example, private firms can optimize services using data analytics, electric vehicle fleets, and smart ticketing systems. By engaging businesses in transport operations, cities can benefit from improved efficiency and customer satisfaction. Additionally, collaboration with small and medium enterprises (SMEs) for supply chain support can stimulate local economies and enhance the integration of transport services into communities.
To effectively allocate public transport funds, governments must prioritize high-impact projects, particularly in congested urban areas where public transport can alleviate traffic and emissions. Leveraging blended finance — which combines public funds, private investment, and climate finance from institutions like the Green Climate Fund (GCF) — can amplify the impact of limited public resources. Transparent financial management and procurement processes are key to ensuring accountability and efficiency, preventing cost overruns and project delays.
Attracting private investment in public transport requires risk mitigation strategies, such as government-backed guarantees or concessional loans that reduce financing risks, which are borne by the private sector partners. Developing “bankable” projects with thorough feasibility studies and clear profit models can further entice investors. Offering incentives like tax breaks or revenue-sharing from ancillary services, such as advertising or retail spaces at transport hubs – often referred to as land-value capture, can also enhance the financial attractiveness of public transport projects.
The shift towards sustainable transportation is a critical component of addressing the global climate crisis. For Africa, expanding public transport while integrating electric vehicles (EVs) represents a significant challenge but also an opportunity to enhance mobility, reduce emissions, and improve air quality. From the UK’s perspective, its contributions to Africa’s public transport funding and the EV transition are central to fostering green growth on the continent. The UK government, alongside its private sector and financial institutions, has taken several strategic steps to support this transformation.
One of the key drivers of the UK’s support for the EV transition in Africa is its commitment to international climate goals. The UK’s development policy increasingly emphasizes climate resilience and sustainability, with transport infrastructure playing a vital role. Through initiatives such as the UK-Africa Investment Summit and COP26, the UK has pledged to work with African governments to enhance sustainable transport solutions. For instance, the UK’s Partnership for Accelerating Clean Energy (PACE) and Green Africa Power programs have laid the groundwork for funding low-carbon solutions, particularly by targeting renewable energy and the electrification of transport systems.
Public-private partnerships (PPPs) have emerged as an essential mechanism through which the UK channels its support for Africa’s transport sector. These partnerships help leverage private investments, often backed by UK Export Finance (UKEF), to develop infrastructure projects that include EV charging networks, renewable energy supply chains, and electric bus fleets. The UK’s expertise in PPPs has been instrumental in advising African governments on structuring funding agreements that mitigate risks and attract long-term investors. This approach not only brings in capital but also builds local capacities, ensuring that African cities can maintain and expand their EV infrastructure sustainably.
One of the prominent examples of UK-Africa collaboration is the financing of EV bus fleets in cities like Nairobi and Lagos. In Nairobi, UK-backed companies such as BasiGo are working to provide electric buses, supported by concessional loans and grants from the UK government. The project aims to reduce reliance on imported fossil fuels, lower greenhouse gas emissions, and improve urban air quality. Similar efforts are underway in Lagos, where the UK government is collaborating with local transport operators to transition diesel-powered buses to electric fleets, with funding from development banks and UK-based green finance initiatives.
The UK also recognizes the importance of policy and regulatory frameworks in driving the EV transition. Through technical assistance programs funded by the UK’s Foreign, Commonwealth & Development Office (FCDO), African governments receive support in creating policies that encourage EV adoption, including incentives for manufacturers, importers, and users of electric vehicles. This assistance is vital as many African countries face challenges in establishing the legal and financial conditions needed to accelerate EV deployment. The UK’s experience in EV policy-making, gained through its own transition to cleaner transport, has been invaluable in shaping similar frameworks in African cities.
Despite these efforts, significant funding gaps remain. The cost of upgrading Africa’s transport infrastructure to accommodate EVs, including installing charging stations, modernizing grid systems, and retrofitting public transport vehicles, is substantial. The UK has encouraged African countries to explore blended finance models, where public funds, concessional loans, and private capital are combined to cover the costs of EV transition projects. UK-based development finance institutions like CDC Group (now British International Investment) have played a pivotal role in co-financing large-scale EV projects across Africa, ensuring that both environmental and social returns are achieved.
In conclusion, the UK’s perspective on expanding public transport funding in Africa, particularly in the context of the EV transition, highlights a collaborative approach. Through a combination of financial support, technical expertise, and public-private partnerships, the UK is contributing to Africa’s efforts to modernize its transport systems and embrace low-carbon mobility solutions. However, the success of these initiatives will depend on continued funding, robust policy frameworks, and the willingness of both African and international stakeholders to invest in Africa’s sustainable transport future.
Transport infrastructure is the backbone of any growing economy, and in Africa, where urbanization and population growth are among the highest in the world rising by approximately 3.5% annually, the demand for improved transport systems is more pressing than ever. Funding these transport projects, however, has proven challenging due to limited public budgets, risk-averse private investors, and uneven distribution of resources.
Current estimates suggest that Africa needs to invest $150 billion annually in infrastructure to meet its growing transport needs but the actual funding flows are significantly lower. The gap between required investments and actual funding highlights the need for innovative financing solutions to bridge this divide.
Public transport in Africa is primarily funded through a mix of government budgets, loans and grants from Multilateral Development Banks and Public-Private Partnerships (PPPs). National and municipal governments allocate funds for infrastructure and operational costs, but these budgets are often limited given the scale of infrastructure needs.
Multilateral Development Banks (MDBs) are one of the largest sources of funding for transport in Africa. In 2022, MDBs such as the World Bank and the African Development Bank (AfDB) collectively provided approximately $38 billion in climate and infrastructure financing, a significant portion of which was dedicated to transport projects. A large percentage of this funding goes to high-profile projects in megacities, leaving many smaller cities and rural areas underserved.
The private sector is playing an increasingly crucial role in financing transport infrastructure in Africa, particularly through Public-Private Partnerships (PPPs). These models enable private companies to finance, construct, and often operate transport systems, easing the financial strain on governments. Notable examples include Dakar’s fully electric Bus Rapid Transit (BRT) system, which uses solar-generated renewable energy, and Lagos’ BRT system, which has significantly improved public transport in Nigeria’s largest city. However, despite these advances, challenges such as political risk, regulatory uncertainty, and concerns over project profitability continue to limit private sector involvement.
Transport funding remains unevenly distributed across African cities. Megacities like Lagos, Johannesburg, and Cairo attract the bulk of investment due to their size and infrastructure needs, securing support for projects such as Lagos’ BRT and Addis Ababa’s Light Rail, both of which benefit from international and government financing. Mid-sized cities like Nairobi and Dakar are drawing more investment, particularly in green transport initiatives, but smaller cities often struggle to secure significant funding. This imbalance highlights the need for more inclusive financing mechanisms to support smaller urban centers where transport infrastructure is vital for economic growth.
Several African cities have successfully implemented public transport projects that serve as models for others. Addis Ababa’s Light Rail, funded through a combination of Chinese loans and government investment, was among the first of its kind in Africa Morocco’s Rabat-Salé Tramway, funded by local and international sources, and Lagos’ BRT, supported by the World Bank, are other notable successes. These projects demonstrate the effectiveness of combining funding from multilateral development banks (MDBs), private investors, and climate funds to build impactful transport systems.
Despite these achievements, significant funding gaps persist. Government budgets remain insufficient to cover the full cost of public transport projects, and while private sector participation is growing, it is still limited. Furthermore, many projects are not considered “bankable” due to concerns about profitability, especially in countries with political instability or weak regulatory frameworks. Addressing these issues will require innovative financing strategies, greater private sector involvement, and enhanced international support to ensure sustainable and equitable transport development across
Africa.
Funding remains unevenly distributed across African cities, with larger cities like Lagos, Johannesburg, and Cairo receiving the bulk of resources due to their size and infrastructure demands. These megacities have been able to secure funding for ambitious projects, such as Lagos’ Bus Rapid Transit (BRT) and Addis Ababa’s Light Rail, both supported by international and government funds. Mid-sized cities like Nairobi and Dakar are increasingly drawing investment, particularly for integrating green transportation solutions, while smaller cities struggle to attract significant funding, resulting in a disparity between urban centers, where public transport is a priority, and less-developed regions, where projects are delayed or underfunded. This imbalance creates a growing divide between well-funded, high-profile urban projects and the underserved smaller urban centers, where public transport is crucial for connecting communities and driving economic growth. Equitable distribution of funding remains a critical issue that needs to be addressed through more inclusive financing mechanisms
Despite these successes, there are still significant funding shortfalls. Government budgets remain inadequate to cover the full costs of public transport and the private sector’s involvement, though increasing, is still limited. Climate-related funding gaps persist as well, with insufficient resources to fully implement low-carbon transport solutions across the continent. Moreover, the unequal distribution of funding means that smaller cities, which need significant upgrades, are often left behind compared to their larger counterparts. Solving these challenges will require innovative financing models, increased private sector participation, and targeted international support for sustainable, inclusive transport development.
Moreover, many public transport projects in Africa are not considered “bankable” by private investors due to concerns over long-term profitability. This is particularly true in countries with weak governance, unpredictable regulatory environments, or political instability. As a result, private sector involvement remains concentrated in more politically stable and economically robust countries.
Valuable insights that empower decision-making and strategic business perspectives.