Kenya failed to be listed in the latest Fraser’s mining investment attractive index (2018), which is a drop from the previous year where the country was ranked second worst (90 out of 91) in the world and worst in Africa. Other sectors made the economy improve to position 56 out of 160 economies in the latest World Bank’s ease of doing business report.
Why is the mining sector pulling the rest of the economy enablers behind in the ease of doing business and attracting investment? Recent reports cite Political meddling as one of the biggest risk mining investors’ in developing economies face today ahead of other risks such as price volatility and capital costs.
The mining sector has often been riddled with misconceptions and ridiculous expectations. To some, it has become an opportunity to get rich quickly.
Admittedly, it is a high revenue sector, however, this is after huge capital investments and exploration risks. High revenues and poor regulations make the sector an easy prey for extortionist and greedy elites who benefit from the lack of proper regulation in the sector.
Due to this, there is lack of goodwill in legislation and implementation of the law, which often leads to political meddling.
For instance, matters concerning natural resources where mining falls in the country, is a function of the National Government under the fourth schedule of the Kenyan constitution. However, mining companies are subjected to illegal levies and double taxation by county governments.
A case in point is the Sh17 billion land rate levied by the Kajiado County government on Magadi Soda Company. The company is owned by Tata Chemicals and has been extracting Trona from Lake Magadi since the colonial era.
Even with the case being quashed by the courts for being unlawful and irregular, there has been allegations that the dispute was solved through secret agreements.
According to the Mining Act 2016, every mineral within Kenya’s jurisdiction is the property of the republic despite any right or ownership of land on which the minerals is present.
The Act however requires landowners’ consent in order to grant the licences. This has created a huge lacuna in the law which has allowed manipulation by political actors pretending to be fighting for the interests of landowners and communities when all they care about is their personal interests. The alleged scheme to take over Karebe gold, which is the largest producer of gold in Kenya is a perfect example.
The gold mine, which is situated in Nandi County, is owned by a Zimbabwean investor who has stopped operations because its land lease has not been renewed by the landowner.
Local politicians have been inciting locals who own the land against the company so that they are able to get the mines for themselves. This is a very clear case of political exploitation of a community for selfish gain by politicians who have muscle against investors who generate revenue for the country. Another example is the now very emotive invasion of Kenyan businesses by the Chinese.
The writer is chairperson, Mining Engineers Society of Kenya.