Policy Alert: Senegal introduces VAT exemption for off-grid solar products

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Policy Alert: Senegal introduces VAT exemption for off-grid solar products

On Thursday 23 July, GOGLA hosted the 6th meeting of the off-grid consultation framework in Senegal. The Ministry of Energy announced the final signature of the adapted bill exempting VAT for “the production of renewable energies related to solar, wind and biogas energy”.

Namory Doumbia, GOGLA's West and Central Africa Regional Representative, explains: "At present VAT is charged at the full 18% rate for off-grid solar products. Through the newly enacted bill, the Government in Senegal commits to pursuing universal energy access through renewable energy. To continue along this track, the newly introduced mechanism will positively affect the off-grid solar industry, stimulating green growth and job creation. The new measure will help businesses reach those most in need of electricity access, leading to more empowered consumers and more resilient communities. As a partner of the Government, GOGLA will seek to support the implementation process."

You can find more information about the list of exempted products in the signed document (in French).

Here are some of the reactions we've received from our members:

Thomas Samuel, President, MOON says, "This awaited tax exemption will be instrumental for Moon to scale faster it's impact in off grid villages in Casamance and reduce the cost of the products for its beneficiaries."

Julien Porton, CEO, Nadji.Bi Group says, We are glad that a new step toward VAT exemption for renewable energy quality equipment have been reached in Senegal (for solar, wind and biogas). Operational measures should follow soon. This is definitively a very important step toward our government goal: universal access by 2025, and a real financial incentive for the off-grid population. As a local manufacturer, this measure will not directly impact our costing, but by making our solutions more affordable for end-users, it should definitively increase selling volumes, as well as improving repayment rates for our customers the Micro finance institutions and the PAYGo operators, finally cashflow situation will be improved for every renewable energy players.” 

Emilien Di Gennaro, Senegal Country Director, PEG Africa says, "Getting such an exemption on VAT is a great way for the Senegalese authorities to prove their commitment into considering the SHS industry to be a key partner toward the objective of universal access to energy 2025 and we will thank to this new policy be able to serve more customers throughout the country."

Joan Le Fur, Senegal Business Developer, Little Sun says, I am currently about to place other orders for solar products and I can tell this will be a game changer for us as it shows that at the political level our industry impact is recognised (positive indicator for fundraising opportunities and support from suppliers) and it will definitely be more impactful for communities in rural Senegal that had issues with acquisition cost insofar as it will alleviate energy access due to its price drop. I am convinced that after Covid situation, this is a key decision that will help us relaunch our activities.

Gabriele Schwarz, Founder and Managing Director, Bonergie says, The VAT exemption for renewable energy products in Senegal is a big and important step for our sector. Solar products are ideal for creating businesses and generating income, especially in rural areas, but these products must also be accessible. For Bonergie it is very important that solar pumps are also exempt from VAT, because as we see particularly in the Covid-19 crisis, it is important for a country to be as autonomous as possible in food production and this starts with modern irrigation systems. Income, generated in agriculture, can now be invested in more comfort in the houses, which can be electrified by Solar Home Systems, which will also profit from the TVA exemption. This step will help us to increase sales, but the biggest benefit is for our customers.“ 

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