In March 2012, Kenya officially announced that oil had been found in Ngamia 1 block in Turkana by British company Tullow Oil. While assuring the citizenry of the potential of the oil find, both the President and PM cautioned on the need to ensure that the resource benefits all Kenyans.
They also cautioned on the need to ensure the oil did not turn into the proverbial resource curse that has turned many promising states into banana republics.
In The Trouble with Nigeria, writer Chinua Achebe warns of the pitfalls of the extractive industry. Whether Kenya follows the path of countries where the extractive industry has been a source of conflict and poverty and led to increased poverty, or where it has resulted in greater prosperity and expansion of the economy will depend entirely on the measures the country takes.
The solution for Kenya is to develop robust laws and policies, and credible institutions. We already have a robust constitutional dispensation which can enable the country realise the benefits from oil and minerals.
First, the Constitution clarifies that oil and mineral resources belong to all Kenyans irrespective of which part of the country they are discovered. Effective benefit sharing arrangements will help ensure that while the resources are national, their proceeds are shared equitably through considerations of linkages to land rights.
The devolved governance arrangement also guards against past practices where decisions on the extraction of such resources were either concentrated in the capital city or inequitably spread across the country.
Leaders will need to put in place adequate laws, policies and regulator regimes to govern the extractive sector. The Mining Act of 1940 and the Petroleum (Exploration and Production) Act of 1986 are woefully inadequate.
The government must fast-track the ongoing process of development and enactment of modern laws and polies for the sector, including the enactment of the Mining Bill, the Petroleum (Exploration and Production) Bill, the Sovereign Wealth Fund law and revisions to both the energy law and policy.
But laws alone are not enough. Practical action is also required in other fronts. Leaders have a responsibility to manage citizens’ expectations. Despite the discoveries, the extractive industry still accounts for less than one per cent of the country’s GDP with the highest projections being nine per cent.
Government and citizens must, while supporting the industry, also pay attention to other sectors and ensure they are given adequate support, too. Only then will livelihoods be improved and the country avoid the Dutch disease experienced by countries that relied too much on the extractive sector and ended up killing their more traditional industries.
We stand on the tipping point of either using the discoveries in Turkana, Mui Basin, Lamu, Kwale and other parts of the country to join the leagues of such countries like Norway and Botswana, whose economies have benefitted hugely from the extractive industry, or follow in the footsteps of numerous countries where the extractive sector has only brought misery and suffering to the citizenry, and where benefits have been enjoyed by a few elites and political leaders.
The choice is ours.
Dr Odote teaches law at the University of Nairobi.