Uganda’s solar photovoltaic (PV) capacity has grown by 250 per cent over the past six years, according to East African Solar Energy Report published by SolarPlaza in 2019. Despite the small size, and low electrification rates, Uganda has the highest share of solar energy across Eastern Africa in the energy mix at 70 Mega Watts (MW) of installed PV capacity.
By end of 2019, solar installed capacity is expected to stretch to 120MW. With average irradiation level of 5-6kwh/M2/day, the north and eastern parts of the country present an even more opportunity for both Solar Home Systems penetration – and mini-grid projects.
According to Global Off-Grid Lighting Association (GOGLA) and Vivid Economics, 2018, the decentralised renewable energy industry, including both mini-grids and standalone solutions, is expected to directly employ 4.5 million people by 2030 globally.
Supportive policy and financial environments in emerging economies could see 1.3 million jobs created in the off-grid sector alone by 2022, of which 510,000 will be medium and high-skill jobs, including roles in finance, customer support and management.
Compared to other energy sectors, the off-grid sector provides particularly good opportunities for women in the labour market and for female entrepreneurship, while new value chains create employment in rural regions where employment opportunities are often limited (Renewable Energy, IRENA, 2019).
Until now, job creation has been driven primarily by market growth. This has been made possible by rapid advances in technology, with an increasing range of quality-verified products and components being offered at ever lower prices (Lighting Global 2016).
Increasing production volumes have also had a significant impact on the cost of production, with the industry achieving tremendous economies of scale, leading to more affordable products available to the end consumer.
Whereas, like many other countries, Uganda is pursuing manufacturing as a central driver for employment, off-grid solar sector offers even more greener jobs that are being created in other parts of the value chain such as sales, customer support and software development.
By investing in education and training to ensure the availability of skilled employment in the sector, or by promoting and enforcing quality standards to increase trust in off-grid technology, Uganda will be able to accelerate market growth, scale up the number and range of jobs created – especially in rural areas and increase tax revenue and expand energy access. The faster the market grows, the more jobs will be created, boosting tax revenues and helping Uganda achieve universal energy access targets.
Let’s take an example of one of Fenix International, a company of ENGIE, and a leading pay-go solar company operating in Uganda. This company, already provides high quality employment with training programs, health insurance, savings schemes, and career growth opportunities to over 450 full-time Ugandans and over 1,500 commission-based agents in every district of Uganda.
Fenix has so far connected more than 350,000 homes in Uganda with affordable, clean energy solutions – translating into 1.5 million citizens that now benefit from clean, renewable access to energy.
Fenix International made more than 160,000 electricity connections in 2018 alone (800,000 people) and projects to connect another 250,000 households in 2019 (1,000,000 people). Fenix remits more than Shs2 billion in Pay As You Earn (PAYE) to government of Uganda and has brought more than 300,000 new households into the tax base, as all Fenix energy payments are paid over Mobile Money.
Imagine, if we had 100 Fenix’s! Imagine the benefits the country would accrue from sheer scale!
One way for government to support this acceleration is to focus on measures that support the industry in making a range of affordable and high-quality products available to the end consumer.
To urgently deliver on this, Uganda’s ministry of Finance, Planning and Economic Development should comply with East African Community (EAC) guidance and clarity to exempt 18 per cent Value Added Tax (VAT) and 25 per cent import duty on solar home systems including cables and LED lights.
It’s indeed time to act on December 1, 2016 technical letter to EAC Member States, by the Customs Director (EAC), Mr Kenneth Bagamuhunda, who wrote “We note that some solar equipment, particularly for home use, are imported as complete sets constituting a mixture of development, generation and end use units.
It’s our view that items like specialised solar cables and lights are integral part of the solar development and should be exempt”.
Finally, it is important that government creates trust in off-grid technology and protects consumers through promoting quality-verified products. Building and leveraging capacity of Uganda National Bureau of Standards is key to sanitising the market and growing of jobs.
Mr Rwakakamba is the vice president of Global Off-Grid Lighting Association (GOGLA).