British mining firms on the spot over Kenya deals

A Tullow oil rig at Cheptuket in Elgeyo-Marakwet County. PHOTO | FILE
A Tullow oil rig at Cheptuket in Elgeyo-Marakwet County. PHOTO | FILE 

A new report by a London-based UK charity says Kenya is among African nations losing their massive mineral and oil wealth to British mining firms exploiting weak laws.

The report by British Charity War on Want questions the business relationship of British mining firms in Kenya and other African nations, terming it exploitative and not beneficial to locals.

It says British companies, aided and abetted by the UK government, are at the forefront of a new ‘scramble for Africa’.

It says Kenya and African Governments and their citizens do not benefit from the revenues associated with extractive sectors, alleging the British firms expatriate profits.

It points out that lack of taxation compounds the problem, with the British firms taking away all the export earnings.

“Africa’s wealth in natural resources is being handed over to foreign, private interests. Foreign, private companies will benefit most from the exploitation of these reserves. In only a minority of mining operations do African governments have a shareholding in projects, and even if they do this tends to be small at 5-20 per cent. In many oil and gas projects, the government does have a shareholding but this also tends to be low.

Again, it is the foreign company that gains most of the profits,” says the report titled, The New Colonialism: Britain’s Scramble for Africa’s Energy and Mineral Resources.

It claims the mining firms do not employ a large percentage of staff from Kenya or procure a large proportion of the goods and services produced in Kenya.

It says tax rates are minimal and that companies easily avoid paying taxes, either by using tax havens or being given large tax incentives by governments.

“The term ‘export earnings’ is a misnomer. Governments only benefit from exports when there is an export tax. There are almost none in Africa,” says the report.

The report says British mining firms have incorporated in tax havens in the  British Virgin Islands, Guernsey, Jersey, Bermuda  and the Cayman Islands.

The report says that as many as 101 companies listed on the London Stock Exchange (LSE), the majority of which are British, have mining operations in Africa and control resources worth in excess of $1 trillion.

British mining firms with interests in Kenya cited in the report include Acacia Mining Plc, Goldplat Plc, Lonmin Plc, Red Rock Resources, BG Group, Bowleven Oil & Gas, Ophir Energy Plc, Premier Oil Plc and Tullow Oil Plc.