Uganda faces challenges in transforming its agriculture sector through solar energy due to high costs. The Ministry of Agriculture has expressed concerns that the current expense of solar technology could prevent the country from achieving its agricultural goals by 2040.
Mr. Dominic Mucunguzi, the assistant commissioner for irrigation and drainage at the Ministry of Agriculture, discussed these challenges at the first solar exhibition organized by the Uganda Solar Energy Association. He highlighted that the high cost of solar energy is a significant barrier to transforming agriculture across all its stages, including production, manufacturing, and cooling. Mucunguzi did not provide additional specifics but emphasized the difficulties posed by these costs.
The government has been working to increase solar energy use as a means of improving agricultural productivity, particularly in rural areas. Last year, the government, in collaboration with Nexus Green, announced a $90 million (Shs331 billion) project to build 400 solar-powered water irrigation sites in northern and eastern Uganda. This initiative aims to enhance agricultural productivity and improve the livelihoods of 25,000 people in water-stressed districts.
According to the 2019/20 Uganda National Household Survey, out of 8.9 million households in Uganda, 6.2 million live in rural areas. Of these, 3.1 million households have access to electricity, with the majority—2.8 million—using solar energy as their primary source. Despite this, solar technology remains expensive due to high initial investment costs.
The high costs are partly attributed to an inconsistent tax regime. Mr. Roy Baguma, the managing director of the Uganda Energy Credit Capitalization Company, criticized the Uganda Revenue Authority for its inconsistent taxation on solar products. He noted that different taxes are applied to similar products, and some products are exempt from tax while others are not. For example, value-added tax is charged on solar lanterns with detached panels but not on those with embedded panels. Similarly, solar pumps used for irrigation are tax-exempt, whereas clean cooking technologies like electric pressure cookers are taxed.
Efforts to streamline the tax regime could help reduce costs and promote wider adoption of solar technology, which is crucial for transforming agriculture in Uganda.
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