World Bank wants 35pc stake rule on mining firms dropped


Mines rehabilitation in Kwale on June 29, 2022. PHOTO | KEVIN ODIT | NMG

The World Bank has asked Kenya to drop the requirement for mining firms in Kenya to cede at least 35 percent stake to locals to attract more investments.

The lender has urged policymakers in the country to develop a mining regulatory framework for regional equity to attract investments and maximise revenues from natural resources.

The law currently requires that foreign mining firms cede 35 of their mining operations to Kenyans, amid a lack of extensive data on mineral deposits in the country.

The World Bank has warned in its Africa’s Resource Future report that the policy requirement for local equity is a deterrent to investments, denying the country potential revenue.

“Expanding local equity to a regional level can facilitate the emergence of medium-size regional mining firms that have the capital to invest and sufficient interest in investing in various African jurisdictions,” says the World Bank.

The Mining Act 2016 makes the granting of every mining license conditional on local equity of at least 35 percent in respect of mineral rights.

Though mining activity has been present in the country for over 50 years, productivity has remained low, with a scale of operations limited to only soda ash and mineral sands.

Prior to the modern mining code, successive governments registered limited success in developing the country’s mining potential, with foreign exploration companies getting discouraged by poor infrastructure and an outdated legal framework.

Kenya has proven deposits of titanium in Kwale, gold in western Kenya and coal at Mui Basin, Kitui.

In addition, the country is believed to hold significant deposits of copper, niobium, manganese and rare earth minerals, which largely remain under-exploited, dwarfing the mining sector’s contribution to the national economic output.

For years, the sector’s contribution to GDP — a measure of national economic output — has stagnated at less than a percentage, hovering between 0.7 and 0.8 percent in five years through 2021.

The World Bank report found that on average countries capture only about 40 percent of the revenue they could potentially collect from natural resources.

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