Justice demands that those who use resources give back due reward to the providers or custodians of the resources. This is the wisdom behind the concept of benefit sharing. The Constitution of Kenya, 2010 requires natural resources to be used for the benefit of the people of Kenya and obliges the state to ensure sustainable exploitation, utilization, management and conservation of the environment and natural resources. It further obliges the state to ensure the equitable sharing of the accruing benefits. The underlying purpose of this provision is to ensure that local communities benefit from the commercialization of natural resources within their area.
Overall, the mining sector has been contributing less than 1% of Kenya’s Gross Domestic Product (GDP) with Kwale Mineral Sands Project contributing to the mining royalties. Base Titanium Limited, is a subsidiary of Base Resources, an Australian based mining company, which has been undertaking mining of Zircon, Rutile and Ilmenite in Kwale County since 2013. The company made its first bulk shipment in 2014 and the National Government has since been collecting royalties from the company. According to the Company’s Annual Reports, it has spent approximately Ksh. 1 billion on community development and remitted approximately Ksh. 4 billion to the National Government in royalties from 2014 to 2018.
The Mining Act provides a breakdown of how royalties should be distributed in that 70% is retained by the National Government; 20% to the County Government and 10% to the community where the mining operations occur. It is however not clear whether Kwale County has been receiving their share but we are sure communities are yet to receive their share of royalties. Further to this, the Mining Act provides that mining corporations should set aside 1% of their gross revenues to benefit the local communities through Community Development Agreements (CDAs). The Community Development Agreement Regulations was enforced in 2017.
According to the company’s Annual Report 2018, the Gross Revenue for Kwale Mining Project was Ksh. 19.8 billion. Using this figure as an example it would mean that the local communities ought to have approximately Ksh. 200 million in line with the the CDA regulations.
Kenya is at the nascent stages of implementing her new mining laws and relevant regulations in order for the mining host communities to fully benefit. For example, in Kwale County, elections of members of the CDA Committee was conducted by the officials from the Ministry of Mining. This committee is made up of: the Governor or his representative, the Member(s) of Parliament from the mining area, MCA(s) from ward(s) affected by mining, one representative for women, one youth representative and one representative for people with disabilities among others. The communities in Kwale are not impressed by the fact that the CDA Committee is dominated by politicians who might use it as a vehicle to pursue their political interests as shown in the video below.
The second source of revenues which is supposed to benefit marginalized communities in Kenya is the Equalization Fund which was created by the Constitution of Kenya 2010 in an attempt to bridge the inequality gap in Kenya. This fund has been receiving budgetary allocations since 2013/2014. The Commission on Revenue Allocation (CRA) recently reviewed the formula for sharing the Equalization Fund resources from 14 counties to more laser sharp identification of 1,424 marginalized sub-locations spread across 34 counties in Kenya. This was a smart move to ensure that the fund benefits the people who are most in need.
To illustrate the economic inequality in Kwale County for example, Ukunda Ward is far richer than Pongwe-Kikoneni ward or Ramisi ward in Lunga lunga and Msambweni Sub Counties respectively. A total of 39 sub-locations such as Majoreni and Mzizima in Pongwe/Kikoneni Ward as well as Funzi and Mivumoni in Ramisi Ward have been identified in Kwale County as marginalized areas. Previously, the Equalization Fund focused on water, roads and health projects and the new basis is focusing more on poverty alleviation and job creation.
The final source of resources for the mining host communities is the county budgets. All counties have been receiving equitable share, conditional grants and donor funds as well as collection of Own Source of Revenue. Kwale County has received Ksh. 32 billion from 2013/2014 to 2017/2018 from the aforementioned sources. However, an interaction with some of the mining host communities revealed otherwise. Villages such as Kibwaga, Vumbu and Vidungeni have never been allocated even a single project since devolution started. These are the people with most needs but they remain on the sidelines of development as the county spends more on personnel emoluments, operations and maintenance. To exacerbate this fact, Kwale County has shown that they lack absorption capacity for development activities. During the first quarter of Financial Year 2018/2019, Kwale County spent just Ksh. 3.5 million on development out of an annual development budget of Ksh. 7.4 billion. Vumbu, a village at the buffer zone of Base Titanium Limited and that of Kwale International Sugar Company (KISCOL), has no access to schools, markets, health facilities and adequate housing among other essential amenities. Practically, there is no economic activity going on in the village apart from sugar cane farming by KISCOL. The roads in Kibwaga village are impassable during both rainy and dry seasons. The excuse always given for lack of development in Nguluku, Kibwaga and Vumbu is that residents will be relocated to pave way for mining. Kwale County Government can provide mobile services as they seek for a long-term solution.
It is prudent for the County Governments to stop discrimination of its people based on economic condition, geographic location, clan or tribe and the mining host communities should never be left under the mercies of mining corporations who as any other business are after maximizing profits and minimizing costs. It is the core role of the County Government as a duty bearer to provide adequate quantities of basic services such as education, housing, clean pipe water and healthcare services to all.
Written by Geoffrey Kerosi (Economist) and Zulekha Amin (Advocate of the High Court of Kenya)