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Open Letter to President Uhuru Kenyatta

8 min read.

Mr. President, you need to get your act together for this. This is our last big ask from you. It’s also your last scene on the big stage. God knows your performance has not lived up to its billing—and that’s being polite about it. It is your chance for public redemption. It may not matter to you, but it matters to us— to the thousands, maybe millions of lives at stake.

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Open Letter to President Uhuru Kenyatta
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Re: COVID-19 in Kenya

Your Excellency,

COVID-19 is here. Fatal errors have been made. People from Italy managed to travel to western Kenya when Italy was already the global epicentre of the pandemic. One of them was infected. This is unacceptable.

Last Sunday, the government suspended international flights and imposed mandatory quarantine. Passengers did not find quarantine plans in place. They were held up for hours, and then allowed to go home and report back the following day. The following day, they were shuttled from place to place for hours. Yet, the Government had given assurance that a contingency plan for every scenario was in place. This is not true. It was the usual public relations, then shambles. Unfortunately, we are accustomed to this.

Last week, in only your second address on the pandemic, you launched an Internet service. This was a serious error of judgment on your part, and distasteful opportunism on the part of Google. People are worried about food, and you call the nation to attention to launch balloons? Many Kenyans have accused you of being a prisoner of your privileged upbringing. Yet you continue to reinforce that perception. This was yet another one of many let them eat cake moment. It is one too many. Learn from it.

I do not know what your analysts and advisors are telling you but here is the low-down I think you need to have.

If the pandemic progresses to Europe level, we are sitting ducks.

The data we are observing shows that availability of intensive care (i.e ICU) beds is the most critical survival factor. Germany has 1.5 times more infections than France, 30,000 and 20,000 respectively as I write, but France has seven times (860) the fatalities in Germany (130). But it is also the case that Germany has 29 ICU beds per 100,000 people, three times France with 11.6 beds per 100,000 people, that is a 40/100 ratio. What this means is, for 100 people needing ICU beds at the same time, Germany will save most of them, but France could lose all 60 who fail to get ICU beds. In every country, deaths have risen sharply once intensive care capacity is exhausted. The UK delayed its emergency response. With only 6650 confirmed cases, a fifth of Germany’s, they already have two and a half times the number of deaths. But the UK has only 6.6 ICU beds per 100,000 people, less than a quarter of Germany’s capacity.

I gather that we have a total national ICU capacity of 200 beds. That works out to 0.4 beds per 100,000 people, or one bed for every 250,000 people. The global critical illness rate is at 4%. To exhaust our 200 ICU beds at this rate requires only 5000 infections. But many of these beds are already occupied; therefore the actual capacity that will be available is much less. We cannot afford 1,000 infections let alone 5,000.

Allow me to turn to the economy. As Kenyans watch other, mostly European governments roll out economic mitigation and social protection measures, they are wondering when their government will come to the rescue.

We could not be more ill-prepared.

You will no doubt recall that as Finance Minister, you rolled out an Economic Stimulus Package (ESP) to aid recovery from the 2007 global financial crisis and 2007/8 post-election violence shocks. You may also recall that the budget deficit at the time was running at below 4% of GDP, which left plenty of headroom to borrow and spend without risking macroeconomic stability. You will probably also be aware of a fiscal prudence rule of thumb, a deficit “red line” if you like, of 5 – 6 percent of GDP that should not be crossed for too long. You will certainly know that your government has been running a deficit in the order of 7-8 percent of GDP for six years now.

What this means then, is that we do not have the fiscal space for a borrow-and-spend fiscal stimulus. This year, your government has revised domestic borrowing upwards by more than Sh200b from a target of Sh300b at the start of the financial year, to the latest figure of Sh514b. The going just got infinitely tougher. Tax revenue performance which has been in decline throughout your tenure, is about to go in free fall. The deficit will rise regardless.

Ten days ago, I expressed the opinion that fiscal or monetary economic stimulus—what we call demand management instruments in economics— are not the appropriate response and argued instead for a “lifeline fund” to protect jobs. Several countries including UK, Denmark and the Netherlands have since adopted this approach.

What do I mean by “lifeline fund?” Let me use the simplest of examples — a hair salon or barber shop. Hair grooming is the very opposite of social distancing— and it can certainly wait. But thousands of people depend on it for their daily bread (ugali and githeri more like it). Most live day to day. How are they surviving?

The lifeline fund is first and foremost, a safety net for workers like these whose sectors are most badly affected. This is the government’s responsibility just as it provides relief to drought and natural disaster victims. These people, particularly those in the urban informal sector, have nowhere to turn.

Secondly, the lifeline fund aims to keep businesses, especially those that are providing essential goods and services open instead of closing because of low business. We want to avoid shortages that could encourage hoarding, heighten social stress, and drive up prices. Third, the more businesses we keep alive, the faster the recovery will be.

For people in Nairobi’s crowded informal settlements and elsewhere, who do not know where their next meal will come from, the language of social distance and on-line working comes across as a cruel joke. We already have volatile powder keg of gross inequality and social exclusion, and as I already remarked, you personally have reputation for elitist insensitivity. If people get hungry, the soldiers you love to turn to will not help you. Let us not tempt fate.

I have estimated in an op-ed published today on The Elephant that a lifeline fund in the order of 0.5 – 1% of GDP or Sh50-100b would be sufficient to save the situation. But having already argued that it is not prudent to borrow-and-spend, I am obliged to offer suggestions on how else this might be funded. I see two options.

Watch: The Political Economy of Coronavirus: Dr David Ndii Speaks

The first is budget reallocation within the existing deficit by (a) drastic cutback on development projects and (b) mothballing non-essential functions thereby freeing up some non-wage recurrent budget. Certainly, monies budgeted for international travel; workshops and public events can be redeployed immediately. This will require political resolve and execution discipline, the lack of which has been the bane of your government. Time and again, austerity plans are announced, but not followed through. You do not have that luxury anymore. You can no longer kick the can and hope that we will muddle along until it becomes someone else’s problem. Mr. President, your luck has finally run out. If you do not impose financial discipline, you are looking at a financial meltdown in a few months, if not sooner. That will be your legacy.

The second is external finance. The IMF has stated it can avail $57b quickly to low income and emerging markets. If it was shared pro-rata between low and middle countries based on GDP, our share would be in the order of Sh18b ($180m), significant but inadequate in the context of the revenue shock referred to earlier. The Prime Minister of Ethiopia has appealed to the G-20 to advance Africa $150b in emergency funds and to write off debts. I am of the view that African leaders should unite around a moratoriam on debt repayment to official creditors (i.e. multilateral and bilateral lenders). New money even if it could be made available, which I doubt, couldn’t come fast enough, and all sorts of paper work would have to be prepared. The same applies to debt write-offs.

A debt service moratorium on the other hand is equivalent to budget support with money we already have. It is a case of a bird in hand being worth two in the bush. Moreover, on this, it is we the debtors who have the leverage because we can’t pay. Won’t pay is an option.

Our foreign debt service budget to official creditors for the coming financial year is in the order of Sh220b. I propose you reach out to Prime Minister Abiy and work together to champion this alternative.

The next question is how would the lifeline be delivered. The western countries are offering partial salary subsidies, up to 80 percent in UK to companies that keep workers on payroll. I think we should do it differently, for two reasons. First, I need not belabour that the government is broke. Simply put, they are rich, and we are poor. Second, and to my mind more importantly, it will be very difficult to target grants efficiently and fairly in our predominantly informal economy. If money is free, demand will overwhelm supply, and if truth be told, the corruption opportunities are beyond measure.

For these reasons, I propose that the lifeline fund be in the form of a very soft loan with long grace period (6 – 12 months) and reasonable tenure (3 – 5 years). The amount should be a fixed sum per employee and disbursed monthly over a fixed term. Should be entirely linked to the number of employees to the loans should be made available to both workers (as check-off loans) and businesses (business loans). To illustrate, working with a figure of Sh30,000 per worker per month for four months, a restaurant with 10 workers would be entitled to borrow Sh1.2 million. If shared equally between the business and workers, and is interest-free over five years, the business would repay Sh10,000, and the workers Sh500 a month each once the crisis is over. The screening of eligible businesses and actual nitty-gritty of loan administration should be left to banks.

In conclusion Mr. President, allow me proffer what I think are your leadership imperatives:

  1. Broaden your leadership team by establishing a National Covid-19 Response Task Force that includes the other arms of government (Judiciary, Legislature, and Council of Governors) as well as private sector, private healthcare providers, professionals and other leaders in society, with you as Chair. The task force should meet at least twice a week, daily if necessary and update the public on a weekly basis. May I propose you personally take charge of this by way of a weekly press conference.
  2. Establish an independent scientific advisory panel, along the lines of the UKs Scientific Advisory Group for Emergencies (SAGE) to advice you and the National Response Task Force. You need doers (the taskforce) and thinkers (the advisory panel). What we don’t need is provincial administration enforcers donning fatigues and issuing edicts like they have done since colonial times. If we don’t adapt, we will die.
  3. Task the health authorities to mount an aggressive testing effort of high exposed people and clusters (airline and international hotel staff, tourism centres e.g Malindi and Diani etc) to establish the extent, if any, of local transmission. This is imperative because many urban Kenyans have travelled back to rural homes, and they, as well as the Government, needs to know whether they and their families are at risk so that the appropriate response can be mounted.
  4. Task the Treasury, Central Bank and the Kenya Bankers Association to set up a Lifeline Fund along the lines proposed. Task the cabinet to craft an austerity plan within the next seven days with a target of identifying (a) development projects that will be frozen and (b) non-essential functions that can be mothballed with immediate effect.
  5. In addition to the lifeline fund, it may become necessary to provide a social safety net at the community level in the near future. In this regard, may I propose that Ward Level response teams comprising of political (MCA), county and relevant government officials (ward administrators, chiefs, social workers) and community leaders be established, and tasked the responsibility of identifying vulnerable households that may need assistance, if and when that time comes.

Mr. President, you need to get your act together for this. This is our last big ask from you. It’s also your last scene on the big stage. God knows your performance has not lived up to its billing—and that’s being polite about it. It is your chance for public redemption. It many not matter to you, but it matters to us— to the thousands, maybe millions of lives at stake. Stop listening to your buddies, sycophants and frontmen for commercial interests. You will not get away with throwing up your hands and asking the public what they expect you to do.

The race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor wealth to men of understanding, nor favour to men of skill; but time and chance happens to them all. For surely no man knows his time. Like fish caught in a cruel net or birds trapped in a snare, so men are ensared in an evil time than suddenly falls upon them. (Ecclesiastes 9:11-12)

Godspeed

Most respectfully,

David Ndii DPhil(OXON)

Nairobi, 25 March 2020

David Ndii
By

David Ndii is a leading Kenyan economist and public intellectual.

Reflections

I’m Black, I’m Proud. Still

You can’t feed into the darkness. You can’t demand anyone to know what you know, to understand what you understand. People come to truth when they come to it and not a second before.

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I'm Black, I'm Proud. Still
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Growing up down south in the aftermath of the 1960s Negro Revolution in America was truly the best. During that period, three out of every four Black children in America were born in a two-parent home. By the 80s, that number would drop to one in every four.

Education and opportunity were becoming more accessible to black and brown communities everywhere. It would be the force that would get us out of the hole history had placed us in.

We were moving forward and everybody could feel it, but as much as I liked going to school and learning new things, my favourite memories are of when, after school, I got to spend time with my brothers and cousins. There was just something magical that happened when we were together.

We would meet over at grandma’s house in that part of the city we called the village. The village was a straight, two-block walk from school, down King Street, past the Piggly Wiggly store parking lot and then to the stoplight where you take a right turn onto Rommey Street, and another right on to what looks like a parking lot on the side of the church, and just at the bridge, before you crossed the old train track or you would have missed it, the entrance to the court. Thirty or so homes behind the old Methodist Church on a road invisible from the street laid out in the form of a horseshoe.

I cannot talk about the village without talking about the city and the state. Charleston, South Carolina is a peninsula city located on the South Carolina coastline. It was one of the thirteen original colonies and the very first state to break away from the Union, and one of the founding states of the Confederacy.

The village was a housing initiative following the 1964 Civil Rights Act aimed at breaking the cycle of poverty by moving Black families out of the old housing slums and projects and into new affordable homes.

The difference between the projects in the South and the projects up north is the space and design. In most cases, southern projects were designed to be communal properties, different from the stacked high-rises up north or in the Midwest.

The projects down south were simple properties where people learned to share. They shared the backyard when the sun got too high and the front when people just wanted to be outside and catch a breeze. Everybody knew one another and called each other by name. Family arguments, celebrations and losses spilled into neighbouring apartments causing people to act like one big extended family. And even though everybody was poor, they would have been hard-pressed to admit it. Poverty was a state of mind. The community spirit emphasised generosity and everything was shared. If you were hungry and didn’t have food, you could always ask next door.

Having lived in the projects for decades, my grandparents were one of the very first people to be offered a house in the village. I can remember the move like it was yesterday, everyone was so excited.

The year was 1973, I was eight years old. For the first time Black families in Charleston would have the chance of a normal life.

My grandparents, long into retirement, coupled with our large, extended family of cousins, uncles, aunts and three brothers – two older and one younger – were a great source of pride and joy until I learned that the American egalitarian beliefs which I thought were as perfect a foundation as there could be, were but an illusion, a well thought out scheme. We weren’t freed, we were just moving boxes.

Although everyone got their own private home, some did build fences around theirs but others opted against this, allowing for yards to overlap, creating a more open and vibrant community.

My grandparents had a high chain-linked fence, but there was still this sense of togetherness. When something went wrong in the village, the elders would be the first out to deal with it.

My exploration of the real workings of America would begin from within this village in 1976, the year that America celebrated its 200th anniversary of independence from British rule.

That year, I began to see that the ideals that gave birth to the idea of “We the People,” did not include people like me.

I remember a young militant uncle, oozing Black pride, spilling the beans and pointing out to me that neither he nor I, nor any of the millions of other Blacks had reason to celebrate America’s success.

As my White and Black classmates and a nation prepared for the grand July 4th spectacle that would include a  freedom train,  a scheduled stop in our city,  marching bands,  hotdogs, cotton candy and fireworks, I began my own re-education, reading keenly to understand the origins and the construct of the first Americans.

In the 200 years since the Protestant Christians invaded America they’ve enslaved millions, massacred the Indians, and everything we’ve suffered – the chains, the church bombings, our leaders assassinated, brothers lynched – all of it has been part of an elaborate scheme to keep Blacks subjugated.

In June 1740, the British Parliament passed the Naturalization Act of 1740 – the “Plantation Act” – into law.

In this decree, any White European Protestant alien who had been living in any of the thirteen colonies for seven years without being absent from that colony for more than two months, was deemed to be a natural-born citizen of the United Kingdom.

The Plantation Act of 1740 was a direct response to the September 1739 Stono River Slave Rebellion in South Carolina. The Stono Rebellion was the largest slave insurrection in British North America that culminated in the deaths of 25 colonists and about 50 Africans. It was led by an Angolan known as Jemmy and a band of about twenty slaves, who broke into a store, armed themselves and demanded their freedom. They marshalled a group of 60 slaves in an attempt to reach St Augustine in Florida, where the Spanish guaranteed freedom and land to any fugitive slave. The rebellion was crushed at Edisto River, 80 kms away from where the rebellion had started.

The 1740 law criminalised the Black experience itself, restricting the right of free movement, the right to free assembly, and the right to be educated or to earn money. These punitive and discriminatory laws created by men who claimed to be good Christians, legislated the right of plantations owners to even kill rebellious slaves.

Most colonialists considered themselves British until the year 1776 when resentment began to fester among the settlers. Frustrated by taxation and a lack of representation in the British Parliament, these new Americans declared war on their own government demanding independence.

That same year, the British-born political activist, pamphleteer and immigrant to the colonies, Thomas Paine, published a pamphlet titled Common Sense in which he argued the case for a new “America”.

“Europe, and not England, is the parent country of America. This new world hath been the asylum for the persecuted lovers of civil and religious liberty from every part of Europe.”

The American War of Independence was fought from 1776 to 1783.  Seven years later, the Naturalization Act of 1790, the first naturalization law of the new republic legislating who could be granted United States citizenship, was passed into law.

All Free White Persons of “good character” who had been residing in the United States for two years or longer could apply for US citizenship.  In effect, the law’s use of the phrase, “free white person” excluded blacks and immigrants of other races from being eligible for citizenship, and most importantly, for protection under the laws of the court.

As a child I had drank the Kool-Aid and believed that it was peaceful cooperation between the pilgrims and the native Indians that had established the widely practiced Thanksgiving holiday tradition.

I recall summers spent playing cowboys and Indians with my brothers. We took turns at who got to play the Indian. I felt no shame striking the Indians down with my rifle. They were always the bad guys, raiding the poor settlers’ forts, attacking their caravans. But I was baffled by the contradictions. Why would the Indians save the pilgrims who were dying from the cold and hunger only to try to escape from them later? It just didn’t make much sense.

Then it came to me: the Native Americans were fighting to protect their land. We weren’t playing a game; what we were doing was re-enacting a massacre. Over five million Native Americans were killed before the West was conquered.

Regardless the age at which one arrives at truth and understanding, it is always disorienting and disheartening. I’ve found that whether one accepts it or not, the only thing we can be certain of in this world of uncertainty is change.

I spoke with many people after the first 2020 Presidential Debate between President Trump and the Democratic nominee former Vice President Joe Biden that took place in the midst of heightened racial tensions and the COVID-19 pandemic. I got many mixed views regarding the outcome of the debate; some were shocked by the childish display while others dug in, taking sides and displaying party loyalty like it was a football game. Of the many reactions I got, one zoom call from home with my older brother really got me thinking.

“Can you believe that man?”

My older brother is now 60.

I had noticed him wiping his eyes.

I asked, “What ‘s wrong?”

At first he didn’t (want to) speak, he just kept brushing the tears away, then he began,

“Little brother, we grew up together,” he said.

“We pretty much had the same childhood, but I’ll tell you, I have never had any white person call me a nigger or spit on me like these guys up here in Philadelphia tell me they have. I have had White teachers down south who were some of the nicest people you’d want to meet. But, looking at that debate last night and the President of the United States refusing to denounce white supremacy as racist, I just never, you know, thought White people hated us that much.”

I empathised with him because I knew the pain of sacrifice, service, abandonment, rejection and betrayal.

I joined the US Military at seventeen to prove my allegiance to the ideals that made America great in my mind, but war in a foreign land far away from the ones I loved taught me the truth about service and the value of my life.

My brother and I grew up five years apart in a changing post-civil rights America. We were kids of the Kool-Aid generation, the first of our kind. We had opportunities our parents could only have dreamt of. We were the hope of a brighter future, a brighter America. A post-civil rights America.

In the 1960s, the far right party was a party bent on preserving the privileges of natural-born Whites in America, Jim Crow’s America. However, during the 1960s a new consciousness emerged as young White Americans took to the streets to say that they had seen the attack dogs set on peaceful protesters and wanted a better America. In January 1961, a young President-elect  of Irish descent and a wealthy practicing Catholic would become the embodiment of the American dream and challenge the good American Christians to look into their hearts and minds and begin anew to create a better nation where the rights of every American, White and non-White, were protected under the laws of the land.

With a rousing inauguration day speech, JFK inspired Americans to think better of themselves, to think higher of themselves: “Ask not what your country can do for you, but ask what you can do for your country.” He had spoken and the people spoke back. My parents gave me his middle name because they believed life for Blacks in America would be different.

But, in November of 1963, the 46-year-old president, John Fitzgerald Kennedy, was gunned down by a lone gunmen while out in Texas promoting his ideas of equality to the American people.

This is America

My brother was crying because it was hard for him to accept people could be so calculating and one so naive. He, like so many others, wanted badly to believe in a land blessed by God.

I was twelve years old when my big brother left home. He moved up north straight out of high school, where he built a career and retired as a professional chef.  He found love, family and set up a home up north. But in the Trump years, the scales fell from his eyes.

“I never had a racist moment down south, not like the kind of racist moments these guys tell me they’ve encountered here in Philly. I mean I just never believed White people hated us that much.”

I knew the anguish, the shock.  We Blacks down south don’t complain, we see but at the same time we’ve learnt not to see.

My grandma in the village used to say, “You can’t feed into the darkness. You can’t demand anyone to know what you know, to understand what you understand. People see what they want to see. People come to truth when they come to it and not a second before.”

But what you don’t do is stop living.

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Reflections

Gold and Gemstone Policy in Kenya: The Devil Is in the Detail

Small-scale artisanal gold and gemstone mining is decades-old but lack of knowledge and expertise, and limited support from the government have hampered the sector’s development.

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Gold and Gemstone Policy in KenyA: The Devil Is in the Detail
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The evergreen town of Kakamega is a picture of the hustle and bustle typical of any Kenyan town, with many hundreds of folks going about their daily business. But as you leave the town behind, the environment changes, a lush countryside of cultivated fields and densely planted trees giving no hint of the gold mining taking place in the nearby locality of Ikolomani.

Across the country, 432 miles to the southeast of Kakamega is the beautiful transit town of Voi, the largest town in Taita Taveta County which lies at the foothills of the Sagalla massif. But the much smaller town of Mwatate is the county capital, and the source of gemstones that Kenyans from other parts of the country know little about. Mwatate has rubies, red garnet, emeralds, moonstones, tsavorite, okenorite, and many more.

Small-scale artisanal gold and gemstone mining has been going on for decades in both Kakamega and Taita Taveta counties, undertaken mainly by local artisanal miners and by a few non-locals and foreign nationals.

The Mining Act 2016 recognises three levels of mining rights: artisanal mining permits, small-scale mining permits and large-scale mining licences. The small-scale permits and large-scale mining licences are issued at the national level through the Kenya Mineral Rights Board (MRB), while the artisanal mining permits are issued through the county artisanal mining committees. The Mineral Rights Board and the county Artisanal Mining Committees are administratively governed by the State Department of Mining under the Ministry of Petroleum and Mining. The Director of Mines and his representatives in the various counties are in charge of overseeing the implementation of the ministry’s policy frameworks. The Ministry of Petroleum and Mining has key mining regulations in place to govern this process.

But even though the Mineral Rights Board is in place, the process of setting up the county Artisanal Mining Committees (AMCs) has been long drawn out and there seems to be no hurry to implement the mining regulations that were commissioned in 2017. Kakamega County’s AMC was gazetted on 27 March 2020 and the team commissioned on 20 July 2020. However, the AMC has yet to begin its work as the key governmental mechanisms necessary to run the committee are still pending and so no mining permits have been issued to artisanal miners in Kakamega County since the gazettement.

Artisanal miners in Taita Taveta County are in a different situation altogether. The list of members of the county AMC constituted through their appointing authorities has been forwarded to the Ministry of Petroleum and Mining but the AMC has yet to be gazetted. When contacted on this issue, one of the reasons cited by the ministry officials was that factions within the mining fraternity have disputed the list of people proposed to be part of the AMC.

Applications for small-scale mining permits are submitted to the Mineral Rights Board through the Mining Cadastre Portal. The platform is meant to bring these services close to the miners but they complain of the slow response from the Ministry of Mining. They must travel to the ministry to submit the paperwork even after uploading it onto the portal. Access to a stable internet connection is also a challenge in the remote areas of Taita Taveta and Kakamega while some of the small-scale miners lack the capacity to use the online system. Most have to travel to the Ministry’s offices for assistance or else hire someone with the skills to undertake the work for them, rendering the application process both tedious and time-consuming.

The ministry has not undertaken any capacity building and shows a lack of commitment to make the system more efficient and user-friendly. The biggest hindrance, however, is the low budgetary allocation made to the Ministry of Mining, which leaves the staff with limited options in their efforts to serve small-scale miners.

The stated goal of the Mining Cadastre Portal is “to provide an electronic platform for all stakeholders in the mining sector in Kenya to engage directly with the Ministry of Mining.” Existing mineral rights holders (those with mining permits and licenses for mining) or those with pending applications can download, complete and upload the requisite documents. Prospective mineral rights holders can also submit their particulars and other supporting documents through the portal.

The portal is also a one-stop shop for information on mining activities in Kenya. It has a cadastre map of the key areas with mineral resources, as well as details of licence holders, and on-going applications; a click on any part of the map automatically displays the existing information about that specific geographical location.

For artisanal and small-scale miners (ASMs) in Kakamega and Taita Taveta, the portal has had a significant impact on access to public information on mining in Kenya. But the portal also has its limitations. Mining is a highly skilled sector that requires high levels of expert knowledge. Some of the requirements on the portal are beyond the scope of knowledge of most gold and gemstone miners in Kakamega and Taita Taveta. For instance, the portal requires a miner to take the coordinates of the area for which they are applying for a permit. This requires equipment that is typically used by geologists and land surveyors and that is expensive to hire or purchase. A sketch of the area or locality where the miner intends to undertake extraction is another requirement, a very sophisticated process that miners in general cannot undertake on their own.

Lack of knowledge and expertise coupled with lack of access to the internet, or even computers, therefore leaves the small-scale gold and gemstone miners unable to fully exploit the portal.

Aside from these limitations, however, the Kenya Mining Cadastre Portal has been a game changer when it comes to eliminating brokers from the mining sector and it has proven to be a more efficient system than the manual issuing of permits and licences

For instance, unlike the manual system that had no clear guidelines regarding payments, all fees due to the ministry are clearly indicated on the portal and paid directly to the ministry through a cashless system. Moreover, as the portal has centralised all the country’s mining information, cases of loss or manipulation of files or documents have reduced significantly.

The gold and gemstones that are mined in Kakamega and Taita Taveta are exported out of the country with or without any value addition under the provisions of the Mining Act of 2016 which require an export permit from the Cabinet Secretary the application for which is made on the Mining Cadastre Portal.

But while the law on the issuance of mineral export permits is sufficiently detailed, its implementation is the biggest challenge and I have no doubt at all that gold and gemstones are imported into and exported out of Kenya without any form of declaration. There are many routes along the porous Kenyan boarders through which the minerals can slip in or out of the country.

For instance, most of the gold that is mined in Kakamega is taken to Uganda by road undeclared. How can this be remedied, especially for gold and gemstone miners who want to run a clean business? Also, the process of implementing the gold refinery centre in Kakamega and the gemstone value addition centre in Voi remains pending. If the sector is streamlined, then the issue of traceability of gold and gemstones will be resolved and the mineral export licence will be of value to the artisanal and small-scale miners in the sector.

The article is done with support from Diakonia Kenya Country Office under the Madini Yetu Wajibu Wetu (Our Minerals, Our Responsibility) Project. Views expressed in the article are those of the author.

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Reflections

Sustainability Is Key in the Management of Natural Resources

For mineral wealth to have a positive impact there must be transparent policies, reasonable public regulation, commodity flows and sustainable and varied production systems.

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Sustainability Is Key in the Management of Natural Resources
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Natural resource wealth has massive potential and can hugely impact the economy of a country. The natural resource sector and more particularly the petroleum and mining industry is distinguishable from other sectors of the economy in that ventures in this sector are high-risk and prone to failure if not competently undertaken. Moreover, resources in the sector are typically immovable and must be exploited on the site of their discovery.

Being exhaustible and non–renewable, these resources call for prudent exploitation and management that must also factor in intergenerational equity. And unlike other industries, the exploitation of natural resources is community-based, in the sense that the activity takes place inside communities, providing opportunities for conflict as the business pursuits of an investor threaten the general welfare of the community.

Despite the lucrative nature of the sector, it comes with a number of challenges. Learning from the many countries that have experienced the “resource curse”, it is imperative that from the outset, the following issues are taken into consideration if at all a country wishes to progress and develop through the proceeds of its natural resources.

First, a country endowed with mineral resources should always plan to diversify its economy using the proceeds from its mineral wealth. This is done to avoid the Dutch disease and to ensure that the economy can withstand shocks caused by fluctuating prices. Venezuela and Nigeria are two countries that experienced economic recession due to a fall in the price of oil.

Second, while mineral exploration and production automatically comes with a high pollution risk, there is need take contingency measures to mitigate any such damage. Deliberate steps need to be taken to avoid the Niger Delta situation where land has been so degraded that the cost of cleaning up is estimated at £900 million.

Third, the phrase “resource curse” arises from the many cases where the discovery of minerals has resulted in retrogression instead of progress for the communities within which the commodity has been found. More often than not, these host communities experience conflict when the expected benefits are not realised, sometimes because of unrealistic expectations but more often because of corruption. It is important for investors and communities to engage from the outset, ideally with the government facilitating the process. Increasingly, however, civil society and religious organisations are stepping in to fill the gap left by unresponsive governments.

It is clear that natural resource wealth can provide opportunities for countries to improve the living standards of their people and can positively impact the development of nations. Indeed, it is a commonly held belief that nations richly endowed with natural resources are more advantageously positioned to shape the economic, physical and social aspects of their development than those less endowed.

However, the paradox of plenty has been the subject of extensive research by scholars and practitioners precisely because many resource-rich countries are associated with increased poverty levels, civil war, reduced economic growth, greater inequality and social injustice. This is because of a lack of goodwill to develop other sectors of the economy that are not necessarily dependent on natural resources, among other factors.

There are however, countries that can be cited for having taken off successfully.  Norway, one of the world’s richest economies, and Botswana, one of the largest producers of gemstones, have both clearly demonstrated how natural resources can be harnessed to foster development, build the economy and generally improve people’s livelihoods.

Conversely, countries like the Democratic Republic of Congo, with its has huge deposits of natural resources including cobalt which is highly sought after and is of great economic value, and Angola, with its vast reserves of natural gas, are examples of how resources can come to be regarded as a curse due to the civil wars, conflicts, under-development, low GDP, and the many other problems associated with these nations despite being resource-rich.

A number of academic studies also suggest that natural resource wealth slows down the economic growth of a country. This narrative is however challenged by countries like Singapore, the United Arab Emirates and Taiwan which, despite being modestly endowed, have invested the revenue from their limited natural resources in the areas of education and research, have strengthened their policy and legal frameworks and institutions, and established parameters for advancing wealth creation and multiplication, as well as savings for the future generations.

Many theories have been advanced in an attempt to explain the resource trap in mineral rich countries. However, none of the hypotheses advanced has identified the root cause of the paradox of resource abundance. This is because, by themselves, natural resources cannot be classified as either a curse or a blessing; they are opportunities that prudently exploited can jumpstart an economy and bring long-term fiscal benefits to a country.

Unfortunately, a majority of resource-rich countries are anti-democratic and have opaque policies and institutions. Predatory governance, greed and corruption often lead to the signing of secretive and exploitative production contracts that only benefit the investing multinationals and their countries of origin.

However, there are many tried and tested strategies and approaches that have resulted in strong economies with stable and functioning governments. For mineral wealth to have a positive impact and be a blessing there must be transparent policies, reasonable public regulation, commodity flows and sustainable and varied production systems.

A good example is the resource-rich state of Alaska in the United States where 9.6 billion barrels of oil were discovered in 1969. That year Alaska collected US$900 million from the oil lease sales but all the money was soon squandered. Worried that money from the oil resources would go to waste and benefit just a few, Alaskans voted to have the proceeds spent on state development.

Seven years later, and with infrastructure development largely achieved, a public vote established the Alaska Permanent Fund through a constitutional amendment. The fund was designed to receive at least 25 per cent of the oil revenue and in 1982 a dividend programme was added to the fund. The sovereign wealth component promotes and ensures intergenerational savings while the dividend fund ensures that all residents of Alaska enjoy the fruits of their natural resources by receiving annual dividends in the form of cash transfers. Since the first deposit of US$734,000 was made in 1977, the fund had over US$64 billion dollars in 2019 with each resident of Alaska receiving US$1,606 in dividends that year.

From the example above, it is very clear that a country can truly develop using its natural resource wealth. One of the ways in which it can do this is by securing tenure rights to natural resources through regulations that determine who can use the natural resources, for how long and under what conditions. Tenure rights clearly specify the expectations of each stakeholder with regards to their roles and, importantly, the role that the hosting communities are going to play during the entire period of the extraction of the resource.

Contract transparency is another way in which good governance can prevail in the extractive industry. Resource extraction contracts signed between the host governments and the multinational companies should be made public to provide general information to the public and ensure transparency, scrutiny and accountability.

There are countries, like Ghana, that support the idea of contract transparency as a fundamental principle in managing their extractive industry, but many nations have not fully embraced the idea of contract transparency for fear of sparking public outrage and also to conceal the information for personal gain. Through contract transparency, everything that is in the contract is laid bare and the specific expectation from every stakeholder is made public. This promotes good governance and transparency and also ensures that the benefits trickle down to the community level, promoting sustainable development.

Creation of a strong regulatory and institutional framework is also another way of ensuring good governance in the management of natural resources. The legal or regulatory framework can either enhance or inhibit development in the extractive industry and there is no template for what needs to be done in order to ensure a strong legal and regulatory framework. Each country has a unique opportunity to come up with its own tailor-made legal and regulatory framework that works for it and this involves developing laws and regulations that address specific issues in the industry while at the same time safeguarding the interests of the communities and  incorporating international best practices.

Having competent and functional institutions to implement the laws and regulations is another important step towards ensuring good governance in the management of the extractive industry. For the enacted laws to be effective, they must be implemented by institutions that are proactive and competent. Narrowing the implementation gap by ensuring that what is happening on the ground is in tandem with the provisions of the law is one of the critical roles of functional institutions.

A strong civil society can help in ensuring good governance in the management of natural resources.  Civil society organisations provide information and have the moral legitimacy to set the resource governance agenda. They can help to democratise power in resource management, and can work to keep other resource governance actors like governments and companies accountable. The civil society plays many roles, among which is the monitoring role, where it ensures that all the state and non-state actors play their role effectively in the management of resources and, more importantly in monitoring and ensuring that benefits are realised at the community level. They also help in highlighting corrupt practices in the industry and non-adherence to the internationally recognised practices guiding the extractive sector. Civil society organisations also have a role in representing the views of ordinary citizens on issues of national importance, in this case the extractive industry.

Lastly, civil society also plays a role in setting the agenda to ensure that the interests of the public in general, and development, are given priority. According to the Institute of Global Environmental Strategies Report of 2007, governments are increasingly involving local communities and non-governmental organisations in the management of natural resources. The ways in which the different stakeholders are involved varies. In involving different stakeholders, the governments broaden the scope of engagement and possibly minimise the chances of achieving a negative impact, reduce conflict and increase efficiency in resource management.

And finally, natural resources cannot be discussed without mentioning the environment. In an effort to benefit from the natural resource wealth while dealing with environmental issues, the following principles should be considered: All decisions made must be anchored in best governmental practice in order to ensure best practice in perpetuity. Resources must also benefit communities away from the resource as the impact of pollution may be felt away from the immediate location of the activity. Where there is no scientific evidence of possible impact, an investor should provide contingency measures and where such evidence of possible impact on the environment exists—usually through an Environmental Impact Assessment—an investor must formulate measures to avoid harming the environment and a polluter must sufficiently compensate for harm caused. We must give future generations the same opportunity to have access to a healthy environment that we as a generation have been given.

The article is done with support from Diakonia Kenya Country Office under the Madini Yetu Wajibu Wetu (Our Minerals, Our Responsibility) Project. Views expressed in the article are those of the author.

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