Columnists

Mining GDP share misrepresented in Economic Survey

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The recently published Economic Survey details that the contribution of mining to GDP was a paltry 0.8 percent, consistent with surveys from previous years. Whereas the survey shows that the sector grew by 18 percent, the figures are underestimated. These figures misrepresent reality and are, therefore, misleading.

There is a saying in the mining world that ‘if it can’t be grown, it must be mined’ stressing the critical role agriculture and mining play in providing the raw materials needed for sustainable development.

While the Economic Survey rightfully presents agriculture as prime contributor to GDP, it trivialises the role of mining in the economy.

The first schedule of the Mining Act 2016 highlights more than 120 types of minerals that can be mined in Kenya. Needless to say, not all of minerals in the schedule are commercially mined in the country.

However, only nine are used in the Survey for GDP computations, all are export minerals and unfortunately, no locally consumed minerals. With partiality, government has traditionally used export minerals and metals as a basis for their economic studies neglecting locally consumed minerals such as industrial and construction minerals.

This bias dates back to the colonial era where mining in colonial States were geared towards supplying raw material to the colonial masters, therefore, being 100 percent for export. Unfortunately, the government has not woken up to the reality that today, metals which are largely exported from developing countries account for only 2.8 percent of global mining production yet these export metals command the largest attention.

In contrast, industrial and construction minerals, which are largely consumed internally, represent 84 percent of global mining production yet command the least attention from governments.

Without a doubt, industrial and construction minerals also referred to as development minerals command the largest mineral production share in Kenya, consistent with global trends.

In spite the fact that these minerals are the backbone of the construction and the real estate sectors, both of which accounted for 15 percent of the GDP, no statistics on production of the minerals is available.

In parallel, a majority of mining operations in Kenya are small scale and operate informally. Consequently, data concerning the magnitude of the sector’s activities is extremely limited. The lack of information in the sector generally extends throughout the value chain from production to consumption.

The fundamental distortion, where mining is ever associated with export materials neglecting industrial and construction minerals has had major implications on perceptions and development of the sector.

The need to re-evaluate the methods used to estimate the value of mining in our economy cannot be overemphasised.

The KNBS should collect data from all minerals and adopt indicators to compute the value gained from the sector. Currently, it is not clear what KNBS uses to come up with their estimates on mining.