The Financial Logic Behind Kenya’s Green Economy Transition

A recent report published by the International Monetary Fund (IMF) states that the Kenyan economy is facing multiple near-term financial challenges, including limited fiscal and external buffers, an elevated cost of living, exchange rate pressures, and tight financial conditions.

To address these challenges, the country is taking proactive steps to capitalise on its abundance of renewable energy resources. At the first Africa Climate Summit, recently held in Nairobi, Kenya outlined its ambition to achieve 100 percent renewable power by 2030 and to fuel the green industries of the future by 2040.

Why renewable energy makes economic sense

One of the most compelling reasons to meet the renewable energy goals mentioned above is cost savings. Renewable energy sources such as wind and solar are becoming increasingly cost-competitive, making the switch to a greener energy posture more viable and leading to long-term savings on energy costs.

Importantly, Kenya’s abundance of renewable resources extends beyond its borders, enabling it to scale up its renewable energy production and potentially meet a significant portion of the world’s energy demand.

Looking at the industry sector, by generating their own clean on-site energy, Kenyan companies can reduce their dependence on external energy suppliers. This independence will help mitigate the risks associated with supply disruptions, ensuring a stable and reliable energy supply. Furthermore, due to the decentralised distribution of renewable energy, industries are protected against power outages during grid failures.

Transitioning to renewable energy sources also stimulates innovation and drives job creation in the renewable energy sector. This has a ripple effect on the local economy, creating opportunities for skilled workers and contributing to economic growth.

Collaborating with capable partners extends these opportunities in the region, creating a win-win scenario for businesses and the community alike.

Brand health and collaboration

Kenya, like many other countries across the globe, has introduced regulations and incentives to promote the adoption of renewable energy. Transitioning to renewables allows industries not only to comply with these regulations but also to take advantage of financial incentives, grants, and tax benefits offered by the government.

That’s not all, such sustainable practices also enhance brand reputation, attracting environmentally conscious customers, investors, and partners. This can lead to increased market share and long-term growth.

By proactively implementing renewable energy, the Kenyan economy is making important strides to stabilise its financial future while contributing to a cleaner, greener world.

Carol Koech, is the Country President Schneider Electric, East Africa