Seeta Shah, Senior Affordable Housing Specialist, Financial Sector Deepening Kenya (FSD Kenya) 

She explained the role and approach of FSD Kenya in greening the built environment. 

Key points 

• There are many Laws, Statutes, and Regulations along the housing value chain (140 of them). This raises the need for intervention to make the regulatory environment support housing. 
• The need for a one-stop shop for approvals to enable the delivery of affordable housing. 

Cecilia Wandiga, Executive director, Centre for Science and Technology Innovations (CSTI). CSTI support science-driven environmental initiatives to stimulate the development of new technologies, promote sustainable business innovations and enable community-led growth across Africa. 

Topic: Circular Materials in Building Construction. 

Key points 

• The scope of the greening of buildings, goes beyond design, to touch on the source of emissions, which comprise human activities, and waste management. 
• The population is ever-growing and yet space remains constant. 
• The need to incorporate information technology. For example, the automation of switches, and a modeling tool known as digital twin modeling, which is used to project the cost of retrofitting a number of buildings, and whether it is worth the effort. 
• The opportunity for waste recycling in the agricultural sector. For example, rice husk waste (one of the biggest environmental pollutants in the world), can be used to make an MDF board. Some companies use banana waste as bio-fortified flour mixtures. 
• Buildings can be material banks (highly embraced in the UK). Demolition should be done carefully to maximize the reuse of materials where possible. 
• Need to change the sustainable waste management act into a strategy. 
• The need for a regulatory sandbox to allow innovation. 
• Importance of having housing data inform policymaking. 

Challenge (s) facing transition. 

Manufacturers find it too expensive to switch the production line. For example, most bio- based plastics will destroy a regular machine. 

Important questions.

• Who provides training to transition in manufacturing?
• How do they get compensated for the losses that arise from the transition?

Below are the highlights of the presentations made in the afternoon.

Wahome Ngugi, Sustainable building Services Engineering, Trium Limited .

Trium ltd consists of building design & construction consultants, they offer a comprehensive range of integrated environmental and engineering solutions for the built environment. Topic; Why Green design? In his presentation, he highlighted the merits of green buildings to be: lower operating costs (15% – 20%), increased property value (4% – 20%) ; Enhanced marketability (Green Buildings sell/lease x4 faster), reduced liability and risk (GB have 30% lower default rate), responsible investing, increased productivity, attracting and retaining talent and combat climate change (+20% savings in GHG emissions).

He identified green building strategies to be;

• Use of sustainable building materials in construction.
• High-performance building modeling to analyze and reduce CO2 emissions.
• Water saving measures e.g. water efficient fixtures, water recycling, rainwater harvesting
• Energy saving measures e.g. use of LED lighting, and Energy Star-rated appliances. 
• Incorporation of waste management practices for both the construction and operational phases.
• Building Management systems and functioning requirement levels for each specific sub- development. 

He also emphasized the use of EDGE (“Excellence in Design for Greater Efficiencies”) as it makes it easy to design and certify resource-efficient and zero-carbon buildings.

Below are the highlights of the presentations made in the afternoon. 

Eliud Barno, Partner, BACE Partners LLP 

Topic; Tax Incentives for Green Buildings 

BACE Partners is a professional service firm focused on providing audit and assurance, advisory, and tax services. 

He explained that in Kenya, tax incentives are meant to reduce the tax payable by qualifying companies thus providing such entities with extra cash to grow their businesses and make them competitive. 

He highlighted the following tax incentives for the construction industry; 

1. Available Tax Incentives for Real Estate in Kenya 

• Hotel buildings (50%), Buildings used for manufacturing (50%), Hospital buildings (50%), and Educational and Commercial buildings (10% per annum)
• The allowance of 50% is claimed in the first year and a residual 25% per annum
• Where the capital expenditure is incurred on the construction of the buildings above and before that building is used it is sold, the seller shall not be allowed a deduction.
• Most real estate developers in Kenya are therefore not eligible to claim investment allowances when they develop and sale

2. Available Tax Incentives for Renewable Energy in Kenya 

a) Corporate Income Tax 

An investment allowance at 50% is given in the first year of use and 25% per year on the residual value. This applies to the equipment used for the transformation and distribution of electricity. Interest income from listed bonds, notes, or other similar securities used to raise funds for infrastructure, projects, and assets defined under Green Bonds Standards and Guidelines, and other social services 

b) Value Added Tax (VAT) 

Inputs or raw materials supplied to solar equipment manufacturers for the manufacture of solar equipment or deep cycle-sealed batteries which exclusively use or store solar power.

This has to be approved by the Cabinet Secretary for the National Treasury, upon recommendation by the Cabinet Secretary responsible for energy and petroleum. 

c) Customs and Excise Tax

• Inputs or raw materials supplied to solar equipment manufacturers for the manufacture of solar equipment or deep cycle-sealed batteries which exclusively use or store solar power.
• This has to be approved by the Cabinet Secretary for the National Treasury, upon recommendation by the Cabinet Secretary responsible for energy and petroleum.

3. How tax incentives can be extended to include green buildings in Kenya

a) VAT exemptions/reductions – In China, under the green building sector, VAT exemptions are given for selling self-manufactured products with no less than 30 percent of waste residues in raw materials; an immediate rebate for selling self-manufactured recycled asphalt concrete produced from waste asphalt concrete; and immediate rebate (50 percent) on the selling of self-manufactured environmentally-friendly new walling materials

b) Investment allowance on the purchase of any special-purpose equipment used in green buildings

c) Energy-saving Income earned by qualified energy-saving service companies engaging in energy management contracting projects is temporarily exempted from business tax. Such companies are also eligible for the CIT three-year exemption + three-year half reduction

d) Accelerated Investment allowances on equipment and buildings-100%?

e) Energy level produced incentives- Rebates for energy produced

f) Significant import duty reductions g) Research and development costs

h) Tax holidays

The panel discussion was moderated by Anne Mwangi, Lead consultant for green building at RNZ.. The following are the areas tackled and the key highlights by each panelist.