Kenya yet to mine its Sh440 billion coastal ecosystem

As the world marks Ocean Day on June 8, Kenya is once again in the spotlight on how to diversify its resources by giving priority to the blue economy for strong and sustainable growth.

Indeed, the country’s Indian Ocean reserve share is worth more than Sh440 billion, according to a UNDP policy brief.

As the host of this year’s Blue Economy Summit in November, supported by Commonwealth leaders, Kenya is only focusing on fisheries both for domestic and export markets, while ignoring others such as harvesting of living resources like sea food and marine biotechnology, extraction of non-living resources (seabed mining), and generation of untapped resources including energy and fresh water.

Fisheries account for only about 0.5 per cent of Kenya’s Gross Domestic Product (GDP) and generate employment for over two million Kenyans through, among others, fishing, boat building, equipment repair, and fish processing, according to the report.

The estimated annual economic value of goods and services in the marine and coastal ecosystem of the blue economy in the Western Indian Ocean is more than Sh2.2 trillion ($22 billion) with Kenya’s share slightly more than Sh440 billion ($4.4 billion) (20 per cent), beating tourism sector share with more than Sh410 billion ($4.1 billion), according to the Kenya Maritime Authority (KMA) estimates.

Marine fishing had an annual fish potential of 350,000 metric tonnes in 2013 worth Sh90 billion yet East Africa only yielded a paltry 9,134 metric tonnes worth Sh2.3 billion.

Therefore, the report states, the full economic potential of marine resources has not been exploited, yet Kenya has a maritime territory of 230,000 square kilometres and a distance of 200 nautical miles offshore.

However, leveraging the blue economy for sustainable development and inclusive growth in the Eastern Africa region faces challenges of illegal and unregulated fishing, piracy and armed robbery, maritime terrorism, illicit trade in crude oil, arms, drug and human trafficking and smuggling of contraband goods, the report notes.

Other challenges are degradation of marine ecosystems through discharge of oil, the dumping of toxic waste, illegal sand harvesting and the destruction of coral reefs and coastal forests.

Kenya is also confronted with piracy in the Indian Ocean, illegal fishing and border disputes, including the dispute with Somalia over the maritime boundary.

The dispute is on a potentially lucrative triangular stretch of 100,000 square kilometres offshore territory that is about 370km from the coastline, believed to be home to huge oil and gas deposits.

“The foregoing suggests that for Kenya to leverage the blue economy for sustainable development and inclusive, thorough feasibility studies need to be conducted to quantify the opportunities of the blue economy and maximise returns from investments in the sector.

“The findings of these studies would assist in exploring the potential for public-private partnerships in areas such as research, product development, concept development, exchange of intellectual property, and financial and human resources development,” the UNDP said in the report released in April.

It is also important for the country to learn from other countries in the Indian Ocean Region such as India, Mauritius, Seychelles, Bangladesh, Thailand, and South Africa that have taken steps to promote the blue economy using the best approach to promote and develop this economy is to adopt a ‘Sub Regional Approach’ initiating development cooperation with likeminded member states.

As such, they will identify common interests within the blue economy, drawing on country’s legislative framework, the Fisheries Management and Development Act of 2016.

The Fisheries Management and Development Act 2016 provides for the conservation, management and development of fisheries and other aquatic resources to enhance the livelihood of communities that depend on fishing. It gives guidance on the import and export trade of fish and fish products, fish quality and safety among other provisions that support sustainable utilization of marine products in Kenya.

The UNDP report recommends that Kenya put in place a blue economy conducive fiscal and regulatory environment that would encourage investment in local ship building, repair and maintenance, attract registration of ships and discourage export of maritime services such as insurance and container cleaning.

Further, policy implications sustainable development implies that economic development is both inclusive and environmentally sound, and to be undertaken in a manner that does not deplete the natural resources that societies depend on in the long-term. The need to balance the economic, social, and environmental dimensions of sustainable development in relation to oceans is a key component of the blue economy.

“It is a difficult balance to reach in practice, given that the fundamental nature of the oceans often renders the use of these resources open to all who can access them, eventually resulting in overexploitation and degradation. At the same time, oceans are subject to several externalities such as habitat loss and pollution, often from land-based activities.

“Because of overexploitation of ocean resources due to conditions of open access and externalities such as pollution and habitat loss, the oceans are underachieving their true potential in terms of livelihoods, food security and human health, and broad economic growth for many of the world’s coastal and island states,” the UNDP said.

According to FAO estimates, approximately 57 per cent of fish stocks are fully exploited and another 30 per cent are over-exploited, depleted or recovering.

Fish stocks are further exploited by illegal, unreported and unregulated fishing, responsible for roughly 11 to 26 million tonnes of fish catches annually, or $10-22 billion in unlawful or undocumented revenue.

“The foregoing suggests that for countries that can make the institutional reforms needed to reduce open access to ocean resources and provide secure incentives for users to take a long-term stake in these resources, there is significant potential for the oceans to contribute much more to broad-based economic growth.”

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At the same time, the agency said, there are growing examples of institutional reforms and regulatory frameworks that can cut the threat that externalities like habitat loss and pollution pose to the blue economy.

For instance, Kenya loses Sh17 billion annually in marine insurance as it largely imports through Cost Insurance Freight (CIF).

This results in the country seeking services from foreign firms in the exporting countries depending on the health of the underlying natural systems, and returns from investments in oceans.

Coastal and island countries that can introduce such reforms can capture some of these vast economic opportunities that healthier oceans offer — provision of seafood from capture fisheries, seafood from aquaculture, tourism and recreation, and marine biotechnology.

In addition to these economic opportunities captured directly by ocean users and stakeholders, the UNDP says, healthy oceans provide public goods that have significant values for economies, such as protection from natural hazards, cultural values associated with oceans, and carbon storage.