Pan-African lender hails Kenya’s tax waiver on clean energy products

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Kenya’s decision to reinstate value added tax (VAT) exemptions on solar and wind power equipment will accelerate a transition to a green economy that guarantees jobs and climate resilience for communities, Victoria Sabula, CEO of Nairobi-based Africa Enterprise Challenge Fund (AECF), said on Friday.

“The move by the government of Kenya is laudable as the reinstatement of VAT exemptions reduces the cost of solar products to consumers,” Sabula said in a statement released in Nairobi.

Ukur Yatani, cabinet secretary at the National Treasury and Planning, during the presentation of the 2021/22 budget statement, announced the return of tax waiver on renewable energy technologies.

Tax exemptions on equipment for generating solar and wind energy are in line with Kenya’s quest to transition to a more resilient and low-carbon economic growth.

According to the 2019 census results, only 50 percent of Kenyan households were connected to the main electricity grid and 21,560 die annually from indoor pollution amid over-reliance on fossil fuels.

Sabula, of the AECF, said lifting taxes on off-grid energy solutions will benefit low-income households reeling from the negative health impact of using kerosene for lighting and cooking.

And tax exemption on clean energy technologies will attract investments in the sector, create additional jobs and spur economic growth in the country, she said.

“It is through such positive fiscal policies that sub-Saharan Africa can realize greater adoption of low-carbon technologies, which will, in turn, make access to electricity and clean cooking cheaper for millions of Africans,” Sabula said, urging Kenya to leverage regulatory incentives, capacity development and public education to spur uptake of cleaner energy solutions in line with its green aspirations. Enditem

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