Nairobi, May 26 -- Habib Lukaya was optimistic that Kenya's incentives for electric vehicle (EV) assemblers would spur growth of the nascent sector as the country positions itself as an e-mobility leader in Africa.

But with a new proposed law that seeks to strip electric motorcycles, minivans and buses of their zero-rated VAT status, that hope fast fading.

"The shift from zero-rating to VAT-exempt is the most impactful change in our business," Mr Lukaya, the Kenya country manager of electric motorcycle firm Roam, told the Business Daily in an interview.

"It is just not a technical tax classification. It directly increases our manufacturing costs and reduces our margins, pushing the cost of these EVs higher."

In this year's Finance Bil...