State to tax charcoal business

The Kenya Forest Service has drafted rules to make charcoal business taxable.

KFS seeks to make charcoal production and transport legal in order to bring the sub-sector into the formal economy. The move comes at a time when a crisis looms due to unchecked harvesting of trees.

KFS director David Mbugua said the new rules aim to make charcoal trade taxable, environment friendly and sustainable, as a ban has not worked.

Illegal status

“The current illegal status has contributed to corruption, makeshift and inefficient production methods as 10 tonnes of trees are burnt to produce one tonne of charcoal, leading massive deforestation,” he said.

KFS aims attract private sector investment in production of efficient kilns. The draft regulations will be presented to a national stakeholders workshop on December 16, before being forwarded to the Environment minister for gazettement.

According to an non-governemental organisation, Energy for Sustainable Development Africa (ESDA), the government loses Sh5.1 billion annually based on current value added tax (VAT) rate of 16 per cent from Sh32 billion generated out of 1.6 million tonnes of charcoal produced locally.

The organisation says regulated and legalised charcoal production can create a sustainable industry and hence more jobs.

About 99 per cent of charcoal producers use inefficient earth kilns, with masonry and metal kilns accounting for less than one per cent. This is blamed for biodiversity loss and water catchment depletion.

The average gross income from charcoal for producers is Sh4,496 monthly, transporters Sh11,298 and vendors Sh7,503.

Mr Mbugua said the KFS seeks a clear policy, as 3 million people depend on charcoal directly or indirectly, and about 500,000 people are involved in the trade, 200,000 being producers.

“The draft rules outline standards and guidelines for production of sustainable charcoal and licensing procedures. Pilot projects will be encouraged to showcase sustainable charcoal production,” he said.

Poverty eradication

Finland has given KFS a Sh220 million grant to support institutional reforms, poverty eradication initiatives and strengthen forest information systems.

Mr Mbugua said KFS had signed a memorandum of understanding with Green Africa Foundation on forest conservation, energy conservation and climate mitigation.