Kenya: Proposed Bill Threatens To Erode Gains in Clean Cooking Sector

  • Kenya’s Finance Bill 2020 proposes an introduction to VAT on items previously exempted under concessions accorded by the Cabinet Secretary.  
  • Particularly, the Bill introduces a VAT of 14% to clean cooking and solar products.
  • The move could see Kenyan households dig deeper into their pockets to pay for clean cooking solutions like Liquid Petroleum Gas (LPG) and improved cookstoves.

The clean cooking sector in Kenya has enjoyed fiscal incentives which have enabled millions of citizens to access clean cooking technologies and fuels. The introduction of VAT at the rate of 14% in proposed Finance Bill threatens to erode numerous gains that have been made toward the achievement of universal energy access by 2022 and Sustainable Development Goal (SDG) 7 which aims at ensuring access to affordable, reliable, sustainable and modern energy for all.

A study carried out in 2019 by CCAK (Clean Cooking Association of Kenya), showed that 58% of households still use the open fire method of cooking, 70% of households use biomass (firewood and charcoal) for cooking; while 19% of households use LPG. LPG adoption was at 3% a decade ago, zero-rating has made it more affordable to consumers, with the adoption increasing to 28% in 2020.

The global statistics paint a grim picture – nearly three billion people today do not have access to modern cooking products and services, with 4 million people dying annually due to indoor pollution caused by dirty fuels. According to the World Bank, “Despite three decades of efforts, access to clean cooking fuel and technologies has continued to be an issue with severe health, gender, economic, environmental, and climate impacts.”

To shed light on the issue and to lobby Parliamentarians to reject the proposed amendment, the ACCESS East African node – Kenya Climate Change Working Group (KCCWG) – convened a webinar that brought together Kenyan stakeholders in the clean cooking sector. These included CSOs, representatives from the private sector, Kenya Ministry of Energy, and the wider public.

During the webinar, ACCESS Coordinator, Jacqueline Kimeu, explained that in Africa, Kenya was a front runner in terms of adoption of renewable energy compared to neighbours such as Tanzania and Uganda, and this was attributed to the current fiscal incentives.  She noted that introducing VAT would not only impact the adoption of clean cooking products but that of solar as well. “The overwhelming majority of off-grid consumers and households who access their energy needs through solar-powered energy solutions come from lower-income, rural communities where VAT exemption on the products has played a critical role in increasing affordability.”

The panelists underscored the implications that would arise out of this amendment including: loss of jobs, the introduction of low-priced counterfeit products from unscrupulous manufacturers, as well as eroding investor confidence in the sector. Not to mention the probability that more Kenyans will resort back to unclean fuels – approximately 70 per cent of households in Kenya still use a type of woodstove as either their primary or secondary fuel, with a greater prevalence of 92 per cent in rural areas.

Update: The Bill is currently being debated and Kenyans are waiting to see what decision the parliamentarians take. The proposed Bill is set to become law by July 1st 2020.

ACCESS is collaborating with Hivos on a project that brings together government and CSOs to share experiences and learnings on how the policy environment is contributing or hampering progress towards achieving Clean Cooking and DRE targets in East, West and South Africa.

To read more on the Ghana workshop, click here.

Prioritizing Electrification and Clean Cooking in Kenya: Energy Act 2019

The stakeholders comprised of national government officials from Kenya’s Ministry of Energy, sub-national government leaders, CSOs in energy and nexus CSOs.

In summary

  • Kenya’s Energy Act of 2019 has the potential to shift the paradigm only if all of the sector players form partnerships geared towards financing, implementation and proper legislative processes that factor in the needs of the energy-poor.
  • Partnerships should be fostered between CSOs and the government to advance and support inclusive and integrated energy plans at the national and county level.
  • Countrywide survey and a resource assessment of all renewable energy resources will set the stage for extensive exploitation of renewable resources to meet Kenyas’ energy needs and requirements.

In partnership with SEforALL’s People-Centered Accelerator, the ACCESS Coalition held a workshop in November 18-19, 2019 in Nairobi Kenya. The workshop brought together stakeholders involved in the implementation of an inclusive, integrated vision of energy access – spanning grid and off-grid electricity and clean cooking.

Kenya’s SEforALL action agenda outlines how the country will achieve its ambitious goals of universal access to electricity by 2022 and clean cooking fuels and technologies by 2030. ACCESS members, partners and other CSOs have continued to support and work in partnership with governments by providing valuable data, advising on policy formulation and demonstrating solutions to secure last-mile energy solutions including how to overcome investment barriers in inclusive energy service planning and delivery. Despite this collaborative approach, Kenya – as is the case of many other African countries – is not on track to achieve its SEforALL/SDG 7 targets.

Participants mapping Kenyan CSO initiatives at the county level

The stakeholders comprised of national government officials from Kenya’s Ministry of Energy, sub-national government leaders, CSOs in energy and nexus CSOs. They interrogated the recently enacted Energy Act of 2019 and its implications on energy provision in Kenya. Specifically looking at how county-level governments in Kenya can be supported to develop their energy plans using an inclusive, Integrated Energy Pathway (IEP) approach, (addressing both grid and off-grid electricity as well as clean cooking) to accelerate the achievement of SEforALL/ SDG7 targets.

Speaking during the event, Jacqueline Kimeu, the ACCESS coordinator noted, “The Energy Act of 2019 consolidated the entire laws relating to energy sector development in Kenya, and provides a framework for the devolution of the provision of energy services to the grassroots level.”

During the intensive two-day sessions the participants probed the existing capacity-building efforts at the national and county level on energy access and integration into cross-sectoral development planning.  Besides outlining the coordination and resources needed, the workshop pointed out potential opportunities within county energy plans and identify areas in which CSOs could collaborate to advance SDG 7. 

Paul Mbuthi, Deputy Director, Ministry of Energy, Kenya, making his remarks during the workshop

The government leaders affirmed their commitment to collaborating with the CSOs to advance energy access in Kenya. As noted by Paul Mbuthi, Deputy Director, Ministry of Energy in Kenya, the country has the right instruments in place. Partnerships with government and CSOs needs to take place within the provision of the frameworks provided. He reiterated “The law provides for modalities of engagement. Opportunities to engage must be created within this framework. CSOs need to identify these opportunities and keep abreast on what is happening at the national level.”

Reaching the underserved

In Kenya, low-income households, located off the grid, in rural areas, spend more than 20% of their total income on energy. It is paramount that the government invests in affordable energy solutions that reach everyone. Caroline McGregor from SEforALL affirmed this commitment during her presentation, “Achieving SDG7 and ‘leaving no one behind’ solutions must be designed to respond to the needs of the poorest and most marginalized in society –those who would get left behind when business is conducted as usual.” 

The workshop in progress

The Act also empowers county governments to build local renewable energy centers in collaboration with the Rural Electrification and Renewable Energy Corporation (REREC) REREC. This creates the platform for technology transfer and technology development assuring counties of energy independence in the long run. Stakeholders were encouraged to work with these energy centres to offer context-specific programs.

The SEforALL People-Centered Accelerator’s Work stream 1 is focused on reaching the hardest to reach; the so-called ‘last mile’. The partner project developed under WS1 for 2019-2020 is “National Strategies”, meaning support for policy development and implementation at the country level, where the access deficits are greatest. ACCESS is the lead implementing partner.

You can download the Energy Act Analysis report here.