Letters of credit (L/Cs) will be used to underwrite transactions in a new trade facilitation platform aimed at accelerating the growing market for electric vehicles (EVs) in Africa.

The GreenShift Africa platform has been developed by US-based GreenMax Capital Group, a specialist advisory and fund management firm focused exclusively on the clean energy sector in emerging markets, and Tradeable, which is focused on promoting trade between Africa and the rest of the world, intra-Africa trade and structured trade finance.

How it works

GreenShift Africa deploys Tradeable's trade facilitation platform to pay overseas manufacturers of electric vehicles - typically bicycles, tricycles and buses - up-front. The vehicles are then sold to local resellers on deferred payment terms.

Resellers pay a deposit, typically between 10-20 per cent of an order value while GreenShift Africa provides its own capital to finance a portion of the remaining percentage of the order value.

Pilot phase

GreenShift Africa, which says it is primarily targeting orders of US$1 million or more, earns a margin on every transaction, each of which is underwritten by an L/C issued by a local bank which backs the payment from the reseller to Tradeable on agreed terms.

A pilot phase aims to finance the importation of US$5 million of electric vehicles and batteries to East Africa across the next 6 months.

Development finance

The developers say they aim to secure US$50 million in blended capital over the next 24 months to support expansion and decrease financing costs of the platform.

Blended capital refers to a financing approach that combines different types of funding, often from various sources, to achieve a specific social, environmental, or economic objective.

It involves blending traditional commercial capital with philanthropic, public, or impact-oriented capital to create a customised financial structure that can address complex challenges and support sustainable development goals.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.