Legal leaps fostering growth of Kenya's green economy

Peter Kamero, Senior Associate, and Rainbow Field, Director, Bowmans Kenya.

This year’s Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) aimed to facilitate substantive discussions, consensus and outcomes on climate-related mitigation, adaptation, finance and collaboration.

The COP27 presidency enjoined governments and the private sector to work together to introduce innovative ways of alleviating the adverse impacts of climate change and upscale the sustainable solutions being implemented in developing countries. 

Kenya’s legislative and policy interventions in response to the challenges posed by climate change have been noteworthy.

These include ratifying the Paris Agreement (on December 28, 2016) and undertaking a Nationally Determined Contribution that includes ambitious mitigation and adaptation components. 

In particular, Kenya has committed to reducing its greenhouse gas emissions by 30 per cent by 2030 relative to business-as-usual practice, in line with its sustainable development agenda and subject to international support in the form of finance, investment, technology development and transfer, and capacity building. 

After Kenya’s Climate Change Act came into force in 2016, the Cabinet Secretary for Environment and Natural Resources was mandated with the coordination and implementation of Kenya’s National Climate Change Action Plan. 

As highlighted in a previous article, one of the ministerial directives that has left an enduring and tangible impact was the ban on the use, manufacture and importation of all plastic bags used for commercial and household packaging. The ban took effect on August 28, 2017. 

A more recent and notable legislative initiative to realise the constitutional right to a clean and healthy environment was the enactment of the Sustainable Waste Management Act, 2022.

It imposes a duty upon every person who generates waste in Kenya to segregate and properly dispose of waste and seeks, amongst other objectives, to promote circular economy practices for green growth and create an enabling environment for employment in the green economy through waste management, recycling and recovery. 

On February 21, 2018, Parliament adopted Sessional Paper No 3 of 2017 on the National Policy on Climate Finance. This policy acknowledged that the discovery of commercially viable deposits of oil and coal in Kenya would likely contribute to increased greenhouse gas emissions. 

To mitigate this, the policy recommended the mobilisation of climate finance that is required to help the government provide incentives to attract and catalyse investments in the expansion of renewable energy, green buildings, energy-efficient household products and the integration of climate change risks and opportunities in the development of infrastructure.

The policy also recommended promoting investor confidence in the voluntary carbon market and innovative financial instruments such as green bonds. 

Under Kenya’s National Climate Change Action Plan 2018-2022, one of the enabling actions to be implemented towards achieving a low-carbon, climate-resilient development is increasing the use of renewable energy for electricity generation. 

This commitment was reiterated by President William Ruto at COP27 by highlighting that although Kenya has significant hydrocarbon and coal deposits, over 90 per cent of the energy generated on the national grid is from renewable sources. 

The President also announced a new framework agreement between Kenya and Fortescue Future Industries for the development of a 300 megawatts (MW) capacity generation green ammonia and green fertiliser facility by 2025.

This facility is expected to create fossil-fuel-free fertiliser, reduce reliance on imports, bolster food production and create employment opportunities. 

These strides are a testament to the ever-increasing importance of environmental, social and governance (ESG) factors in decision-making at multilateral, national and corporate levels. The growing priority around sustainable investments and the value at stake are compelling investors and stakeholders to urgently reshape their approaches to commercial transactions such as mergers and acquisitions and re-evaluate their growth strategies. [Peter Kamero]

The rise of ESG in Kenya is being driven not only by investor and consumer demands but also by legislative developments.

Nevertheless, Kenya’s economy is still highly dependent on climate-sensitive sectors, and much more can be done to deploy green financing to investment opportunities that not only enhance climate resilience and adaptation but also create jobs and propel sustainable growth. 

The interventions institutionalised through the evolving legal and policy framework should be supplemented by significant green investment, which can play a critical role in mitigating climate-related risk, adapting to the effects of climate change and building resilience.

This aligns with the stakeholders’ commitments made at last year’s COP26 to formulate funding arrangements for measures to prevent, mitigate and remedy loss and damage associated with the adverse impacts of climate change. 

Seizing the opportunities to create a resilient, low-carbon economy will require greater collaboration with international stakeholders to raise and deploy capital.

The funds can be used to leverage the burgeoning innovations in agriculture, insurance, e-mobility, healthcare and education as well as unlock more opportunities and deepen financial inclusion. 

Legislative efforts are being made to protect and improve Kenya’s natural and investment climate as well as address its climate and development needs concurrently.

Kenya is strategically positioning itself to attract timely, conscious investments from public sources of climate finance and the numerous private equity funds focusing on various climate change solutions.

The writer, Peter Kamero, is the Senior Associate at Bowmans Kenya.   

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