As the National Treasury plots to generate additional revenues for the government, Kenya’s mineral resource has emerged as a most promising frontier, for the country’s economic enhancement.
The Cabinet Secretary (CS) for Mining, Blue Economy and Maritime Affairs, Hassan Ali Joho, says the mineral resource, if well tapped, can plug in the budget deficit, clear the national debt and ease the tax burden for taxpayers.
However, achieving such noble goals demands navigation of formidable challenges that have hamstrung Kenya’s mining ecosystem for decades.
The CS is eyeing a raft of radical steps aimed at streamlining internal and external factors and optimizing mineral investments’ potential for increased revenue generation.
“Mining is a bedrock for Kenya’s economic growth. If well managed, this resource can settle our debt and yield revenues to spur national development,” Joho notes.
Mining sector contributes a paltry one percent to the national GDP. However, projections show the sector’s GDP contribution, can rise to 10 percent. Current mining performance indicators reveal a sector emerging from operational doldrums with mineral export data for the year 2022/2023, posting a positive growth of 5.9 percent valued at USD 471 million. Revenue from royalties also surged from Sh 1.6 billion in 2019 to Sh3.7 billion by June 2023.
To capitalize on this growth, the CS has adopted a multi-pronged approach, touching on boosting revenue collection, reviewing of mining laws, incentivizing new investors, promotion of artisanal miners and fighting illegal mining.
Illegal mining remains a major threat that denies the government billions in revenue. Additionally, it causes environmental degradation and is blamed on the prevalence of abandoned quarries that are hazardous to lives and property.
To date, over 3,000 illicit operations have been stopped in a relentless campaign to eradicate this illegality. However, the vice persists owing to dearth in enforcement capacity and lack of a coordinated response by state agencies.
While equating illegal mining to economic sabotage, the CS says the wanton plunder of Kenya’s mineral without remitting royalties must never go unpunished.
“Minerals get depleted. Not paying royalties is tantamount to killing our future generations. This must stop,” CS stressed.
To eradicate illegal mining, the CS calls for involvement of security agencies in counties. He states that illegal mining or dealing, should never occur when law enforcement organs are vigilant. He notes that county security agencies, must ensure criminal activities, especially illegal mining are eradicated and perpetrators dealt with.
“Illegal mining is a crime. The security agencies on the ground should treat it as a criminal activity,” says Joho.
In Joho’s cross-hairs are also the investors who owe the government hundreds of millions in unpaid royalties. In a recent meeting in Kisumu County, Joho said arrears must be cleared. He said investors will get a fair payment plan to settle their debts. He also hinted that the government is going after investors who had closed shop after depleting their minerals.
“Some investors made huge profits and left the sector without paying a coin. They too must pay what they owe to Kenyans,” he states.
Such interventions might point to a new dawn for the mining sector. However, pervasiveness of conflicts, communities’ discontentment, quarrels over land consent and manifest hostility between investors and landowners jeopardize mineral investments in Kenya.
In Taita-Taveta, the fate of a Sh10-billion iron-ore project hangs by a thread after disgruntled community members moved to court, challenging the legality of the project. In Nandi County, a protracted dispute between a gold investor and a section of the community is raging while another such conflict is ongoing between a copper investor and local community in Kitui.
Joho says a lasting remedy lies in full involvement of host communities in investment decisions. He warns that community exclusion foments hostilities thereby threatening billions in potential investments.
“Involvement of people and community acceptance are the basis for any investor’s license approval. Communities must be at the heart of investments,” he states.
To foster inclusion, the State is looping in artisanal miners to drive the government’s empowerment agenda. Kenya has over one million artisanal miners who are joining marketing cooperatives. The miners will benefit from allocation of mining zones, training and capacity-building, technical support and linkages to markets.
Under the Whole-of-Government-Approach, the CS says his Ministry will work with National Environmental Management Authority (NEMA), to review the high levies for licenses to artisanal. Also, cooperatives officials will train miners on Sacco benefits while technical and vocational institutions will provide tailor-made short courses on mining, health issues, marketing and finances for artisanal miners.
“We are committed to giving artisanal miners full support to boost their work. When we allocate mining zones for the large-scale investors, we will also allocate to artisanal miners for inclusivity,” he said.
While warning against speculation and arbitrary sale of mineral rights, the CS states that investors holding vast lands without mining will have to give justification not to have their licenses revoked.
To address delays in remitting royalties to counties, the CS calls for amending the Mining Act 2016 to have prompt payment of royalties. Currently, the law directs royalties be shared between the national and county governments and community on the basis of 70, 20 and 10 percent respectively. The money is collected by the treasury for distribution. Joho says counties and communities should not be made to wait for their share while the investor has already made his profits from mineral sales.
“We are eliminating delays. Communities and counties must get their money first before the investor makes his sales and profits,” he notes.
This approach, the CS argues, will encourage county governments to use their resources to fight illegal mining operations in their regions because they are assured of getting immediate benefits from the local licensed mineral resource.
By Wagema Mwangi
