The World Bank ranked Côte d’Ivoire in West Africa as one of the four fastest growing economies in the world in 2019. Since 2011, the economy of the world’s largest cocoa and cashew nut exporter has expanded by an average of 8 percent annually, which is on par with India and China.
Its economic capital Abidjan is home to 5 million people, projected to grow to 7.7 million by 2030. Since well-functioning public transport is strongly correlated to economic development, Abidjan was looking for a better way to meet public transport needs beyond the existing public network and the large, informal sector of private vans that left much to be desired in terms of safety and pollution control.
According to a World Bank study, the poorest households in Abidjan spend an average of 20 to 30 percent of their income on transportation and spend 200 minutes a day using or waiting for transport. The report shows that an improvement in urban mobility in Abidjan of around 20 percent could lead to a GDP growth gain of about 1 percent per year.
Therefore, Abidjan decided to opt for a Bus Rapid Transit (BRT) system featuring high-capacity buses that run on biofuel as well as natural gas, plus an electronic ticketing system, infrastructure consulting and vocational training of drivers and technicians.
The complete package was stitched together and presented by bus maker Scania in close cooperation with Team Sweden, consisting of the Ministry of Foreign Affairs, EKN, Business Sweden, the Swedish Export Credit Corporation (SEK) and Swedfund, a state-owned venture capital company that channels government aid and soft credits into investments in sustainable business projects in emerging markets.
As a result, Scania landed an order for 450 buses from the Ivorian Ministry of Transport and SOTRA, the Abidjan Transport Company. The agreement includes upgrading bus depots and staff training.
“One of the largest deals”
Fredrik Morsing, Managing Director at Scania West Africa says it is one of the company’s largest orders to date in the region, and he believes Scania comes with two major advantages: “We have a flexible product line where chassis are custom made to the particular needs of the buyer and the city. Durability and low maintenance costs also matter.” And, the concept of BRT demands a lot from the vehicles, he adds: “The ideal BRT is based on buses filled to capacity, operating at high speed during long hours of operation. The goal is maximum efficiency with a minimum of emissions per passenger.”
Besides supplying 400 low-entry 13-metre buses, Scania will deliver fifty 18-metre articulated buses that run on Compressed Natural Gas (CNG), emitting half as much carbon dioxide as traditional fossil-fuelled engines. The fact that these buses can also run on biogas paves the way for completely carbon-free public transport in the future.
Even better, the biogas may be produced from local waste: In collaboration with Agence Nationale d’Appui au Développement Rural (ANADER), Scania has initiated a feasibility study funded by Swedfund, to assess the opportunities for producing local biofuels from agricultural waste from cocoa, rubber and banana cultivation. Besides biogas, the waste can also be turned into biodiesel for use in buses with traditional engines.
In addition, Swedfund financed a feasibility study on how Abidjan could evolve from an inefficient transport system to an integrated, coordinated and sustainable system like a BRT. Reaping the full benefit of a bona fide BRT system relies on several factors: To ensure efficient operations and secure revenues, boarding as well as ticketing must be swift and free riders kept out. The low-entry design of Scania’s buses makes for rapid boarding and allows disabled passengers to use the bus, while ticketing is cash-free, automatic and electronic with the help of turnstiles.
Morsing explains the value of Team Sweden in landing the deal: “Large-scale public transport investments such as a BRT are politically driven, with the ultimate decisions made on the governmental level. Team Sweden facilitates access to high-level decisions makers and offers an opportunity to raise a wide spectrum of issues from urban planning to financing.”
Plays a crucial role
Early on, Team Sweden identified the Abidjan public transport tender as a High Potential Opportunity (HPO), a demand-driven promotional program that helps Swedish companies win business deals and large projects all over the world. Team Sweden plays a crucial role in generating new business through coordinated efforts by ensuring that the issues end up on the agenda of relevant political and economic decision makers.
Valued at close to 200 million euro, the ability to finance the Abidjan project also played an important part. In this case, Standard Chartered Bank acted as arranger, with funding from SEK and guarantees from EKN. “The financing was crucial in making the deal happen. Without it, we would not have sold a single bus,” notes Morsing.
EKN has a long and positive experience of supporting Swedish companies in the West African markets and senior underwriter Kristian Orrbeck says EKN is happy to support Scania in this transaction: “This is definitely one of the largest transactions we have done in the region. Côte d’Ivoire is a challenging market, but our decision to guarantee the transaction is based on our in-depth analysis of the macroeconomic and political situation as well as on our previous experience. The fact that the Ministry of Finance is the borrower in the transaction also shows how important this deal is for the country as a whole.”
In addition, The World Bank has approved a USD 300 million credit to the BRT project. Pierre Laporte, World Bank Director in Côte d'Ivoire explains why: "This project will transform urban mobility in Abidjan. Our funding aims to enable a large majority of the population of Abidjan to access, quickly and at low cost, employment opportunities and social services in neighbourhoods with high concentrations of economic activities.”