Kenya Establishes e-Mobility Taskforce Led by ALN Kenya Managing Partner Daniel Ngumy

Through Gazette Notice 10132 of 2023 dated 4 August 2023, the Cabinet Secretary established the e-Mobility Taskforce with the key objective being the development of a national e-Mobility policy to promote growth and development of e-Mobility in Kenya, including a national e-Mobility policy, e-Mobility strategy and implementation plan, e-Mobility legislations and regulations, e-Mobility guidelines and a Regulatory Impact Assessment.

The establishment of the e-Mobility Taskforce comes on the back of collaborative efforts led by ALN Kenya, working in conjunction with representatives of the Electric Mobility Association of Kenya, the International Chamber of Commerce Kenya, the UNEP amongst others, to develop a fiscal policy for electric bicycles, motorcycles and four-wheeler vehicles.

The two year-long efforts finally came to fruition when Kenya’s Parliament introduced significant fiscal incentives to the e-Mobility sector through the Finance Act 2023 (the Act). These fiscal incentives are expected to drive the mass adoption of electric vehicle (EVs) in Kenya.

Introduction of Fiscal Incentives for e-Mobility under the Finance Act, 2023
The Act, effective 1 July 2023, introduced the zero rating of VAT on the importation or sale of e-Mobility vehicles and components, including:

• electric bicycles;
• electric motorcycles of tariff heading 8711.60.00;
• the supply of electric buses of tariff heading 87.02; and
• solar and lithium-ion batteries.

Further, the Act extended the exemption from excise duty on the supply of electric motorcycles.

These new measures under the Act are expected to go a long way in reducing the cost of EVs and encourage their widespread adoption in Kenya. Moreover, they are critical towards incentivising the adoption of e-mobility and creating demand for locally generated clean electricity where over 90% of Kenya’s energy mix comes from renewable sources of energy such as geothermal, solar, wind and hydropower.

The Role of the Taskforce and the Future of e-Mobility in Kenya
Kenya’s commitment to addressing climate change through the promotion of e-Mobility is futuristic and globally pace-setting. As a signatory of the Paris Agreement, the recently introduced fiscal incentives play a crucial role in advancing Kenya’s efforts to achieve its Nationally Determined Contributions and international climate change goals. However, to fully realise the potential of electric vehicles and accelerate the e-mobility revolution, both fiscal and non-fiscal incentives must be expanded and strategically implemented.

The backdrop of these changes is the increasing cost of fossil fuels, with Kenya’s import bill for petroleum fuels having almost tripled from approx. KES 263 billion (approx. USD 1.8 billion) in 2017 to approx. KES 628 billion (approx. 4.3 billion) in 2022. With mass adoption of EVs, the reduction in the fuel import bill could help the country to improve on its forex reserves which, in turn, could be channelled to develop other productive sectors of the economy.

The Energy and Petroleum Regulatory Authority (EPRA) has also recently introduced reduced special electricity tariffs for e-Mobility during peak and off-peak periods which will further incentivise the critical mass adoption of EVs.

Important issues that the Taskforce will need to consider include the development of a national policy which will spur on the widespread adoption of EVs, without hindering innovation through regulation, considering issues relating to deployment of e-Mobility charging infrastructure in various towns (including in partnership with petrol stations), creation of an efficient registration and licensing system for EVs at the National Transport and Safety Authority (NTSA) amongst others.

On the fiscal front, the Taskforce will need to consider the additional incentives relating to lowering taxes on charging infrastructure, enhancement of incentives for EV assembly plants amongst others.

The Transition to e-Mobility
As Kenya continues to pursue its climate change goals and drive economic transformation, fostering the widespread adoption of EVs must remain a focal point. The Taskforce will aim to tap into the collective efforts of the government, private sector and development partners to achieve the Government’s vision of a greener, cleaner, and more sustainable future powered by e-Mobility for Kenya and for Africa. Embracing the potential of electric vehicles not only contributes to a healthier environment but also positions Kenya at the forefront of global efforts in combating climate change.

Should you have any questions regarding the information in this legal alert, please do not hesitate to contact, Daniel Ngumy and Dominic Rebelo. 

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Contributors
1. Priscilla Githinji – Principal Associate
2. Abdullahi Ali – Associate