mineral resources are important national resources that can enhance national socio-economic development if well managed. Historically, Kenya has not been a major player in the extractive sector, with the industry only contributing 1% to the country’s gross domestic product and less than 3% of total export earnings. However, with the discovery and exploitation of minerals such as titanium in Kwale County and oil in Turkana, Kenya is aiming to become a major player in the extractive industry. Questions abound though as to how the exploitation of these minerals is to benefit local populations in the areas where the extractive activities are taking place. Experience from other jurisdictions that have mineral deposits show that the impact of exploitation of mineral resources on the socio-economic development of a people depends on the governance structure that has been put in place to sustainably manage the resources for the benefit of the people. A proper management of mineral resources, termed the “Norwegian Model”, generates shared prosperity for all the mining stakeholders, with equitable sharing of the benefits and burdens of mineral resource exploitation. On the other hand, poor management of mineral resources, termed the “Nigerian Model”, generates the dreaded “resource curse”, leading to conflict and underdevelopment for the majority of the mineral resource shareholders, especially the mining host communities. Kenya is currently in the process of developing a legal framework for the management of the extractive sector, with the governance of the sector bound to determine whether mineral resource exploitation leads to general prosperity or generates the resource curse. The Constitution has created an elaborate framework for the management of natural resources, mineral resources included. It demands that these resources are managed sustainably for the benefit of the Kenyan people. It demands equity in the sharing of benefits from the exploitation of natural resources with all the stakeholders, especially the mining host communities. Further, it calls on those charged with the responsibility of managing these resources to do so in a transparent and accountable manner, with the full, active and informed participation of all the stakeholders. The Constitutional framework for the management of natural resources is bolstered by the Mining Act 2016, which further elaborates on the framework for the management of minerals. The Mining Act has elaborate provisions for benefit sharing, entrenching several mechanisms for the sharing the proceeds of mining projects that include the following:
4Titanium mining benefit sharing in Kwale County• The payment of mineral taxes and royalties, and the sharing of the same between all mining stakeholders;
• Compensation for loss of land and other production resources as a result of mining-based displacements;
• Adoption of mitigation mechanisms to minimize the harmful social, economic and environmental impact of mining activities;
• Training and employment of members of mining host communities as staff in an affirmative employment quota,
• Local procurement of goods and services; and,
• The development of socio-economic infrastructure such as roads, hospitals, schools, water points and access to electricity for the benefit of the mining host communities.

The Local Content Bill 2016 and the Natural Resources (Benefit Sharing) Bill 2014, when enacted, will further bolster these benefit sharing mechanisms, ensuring that local communities benefit from mining projects within their localities.However, despite the elaborate legal framework on benefit sharing, the reality on the ground is different. This report undertook a survey of mining benefit sharing in Nguluku and Bwiti in the context of titanium mining in Maumba, Kwale County. The study found out that there is no equitable benefit sharing in that context, with the mining host communities in Nguluku and Bwiti still experiencing dire socio-economic conditions despite the mining project minting billions from titanium exploitation in their backyards. A myriad of reasons account for the current situation.

The major impediment to benefit sharing has been the poor negotiation leading to the award of the mining licence, a process that did not take into account the needs and interest of Kenyans. The result of these negotiations is a skewed contract for the benefit of the mining operator, but to the detriment of the Country of Kenya in general and the mining host communities in particular. Other impediments include:
failure of the mining operator to substantively involve and engage the local population in the design and implementation of community development projects; failure of the mining operator to effectively mitigate the adverse environmental, social and economic consequences of mining; failure of the National Government to remit the percentage of royalties accruing to the County Government and the mining host communities in accordance with the Mining Act, among others.

If titanium mining is to be beneficial to the mining host communities in Nguluku and Bwiti, the governance structure created by the mining legal framework must be effectively and efficiently enforced. The mining host communities must be substantively and effectively involved in Titanium mining benefit sharing in Kwale Countydecision-making on all aspects of mining and the development of structures of benefit sharing.

This report proposes the creation of a Community Mining Trust Fund (CMTF) as a benefit sharing mechanism to manage mining resources for and on behalf of the local communities so as to generate shared socio-economic development and ensure shared prosperity for the mining host communities. The success of such a venture will, however, depend on the good faith support and participation of all the mining stakeholders, especially the mining host communities, the mining right holder and the County Government of Kwale. These stakeholders must work together to improve the socio-economic situation of the mining host communities in Nguluku and Bwiti.

It is hoped that this report will serve as the basis for open and candid discussion and negotiation between the different mining stakeholders in Kwale County with a view to ensuring that the burdens and benefits of the titanium-mining project are equitably shared by all stakeholders. Such an engagement will require goodwill amongst all stakeholders, with all willing to compromise their hard stance on mining and accept a compromise that is beneficial to all the stakeholders.

 

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