Monday, July 22, 2013

Minerals and transparency: my thoughts.

Rasna Warah identifies three reasons, among others, why African nations continue to be ripped off when their mineral resources are exploited by foreign companies: African governments do not have the legal know-how and resources to draw up agreements that are beneficial to them; sometimes deals are made without proper valuation; and the lack of [African governments'] capacity to add value to their commodities (Mining sector needs regulation; deals with investors should be made public, Daily Nation, 22/07/13.)

In the case of Kenya, the third reason comes closest to being accurate, but only because we do not have an accurate inventory of what value-addition facilities this nation has, who owns them, and what they can do. But, regarding the lack of legal know-how or the improper valuation of out mineral resources, I would beg to differ. Strongly.

Where she identifies the requirement that there must be transparency in these natural resources agreements, she is of one with the Committee of Experts who insisted that such agreements must be approved by Parliament. The CoE, wrong in many instances, surely found that if Parliament played its proper role in the management, including exploitation, of Kenya's natural resources, Kenyans would have a better value-for-money, and the revenues generated from their exploitation would be of national and local benefit. It is the opacity in the regulation of the mineral (and energy) sector that has ensured that Kenyans continue to live from hand to mouth while we sit on mountains of titanium ore and lakes of oil and gas deposits.

Take a look at the legal sector. The top five law firms in Kenya earn in excess of a billion shillings annually in profits. They do so by hiring some of the sharpest legal minds in the nation. But not all legal eagles are to be found in private practice; some can be found languishing in the dark recesses of the vast apparatus we call the Government of Kenya. For instance, the Supreme Court has the Chief justice and Prof JB Ojwang', notable for being a pan-African authority on comparative constitutionalism. The State Law Office (which if it were a private law firm would be the largest in Kenya) has Prof Githu Muigai, whose career as an academic and in private practice is a testimony to legal intelligence that is unrivaled by many.

As to the claim that we are unable to properly value the mineral resources we own, an examination of the available records demonstrates that this too is an inaccurate assertion. The Ministry of Environment, through its long evolution, has maintained a very accurate record of the mineral resources to be found in Kenya. What is notable is that the figures being bandied about regarding the value of the mineral resources in Kenya are calculated using different contextual factors. If the National Executive was open about the factors it took into account when valuing national resources, then Kenyans could have a robust debate about whether we were getting the short end of the stick or not.

I join Ms Warah in calling for greater transparency and accountability in the manner that the mineral sector is regulated. The traditional secrecy of the National Government regarding these types of agreements is counterproductive. When one examines the manner in which the exploitation of the Mui Basin coal in Kitui has been advanced, the secrecy surrounding the resource-agreements between the National Government and the Chinese Company at the heart of the issue has contributed to the great ill-will between the residents of the Mui basin and the National Government and the inherent suspicion Kenyans have about how natural resources in their areas will be exploited.

All resource agreements that have been entered into by the Government of Kenya since 1963 should be published. It is time Kenyans knew who was responsible for the continued unfair exploitation of our national heritage at our expense. Even Article 35 of the Constitution anticipates that transparency and accountability will go a long way to reducing the internecine differences that have traditional stymied economic development in Kenya.

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