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Kenya to Join the League of African Oil Producers 

According to the Ministry of Energy and Petroleum, Kenya will start exporting 2,000 barrels of crude oil per year by December, 2017.

The story of oil production in Africa has not been a good one. It has been surrounded in a shroud of conflicts and violence and has fueled poverty.

There are many lessons Kenya can learn on management of oil resources and the anticipated windfall from the oil.

There are many success stories out there to learn from when it comes to good management to achieve a diversified economy.

Kenya can adopt the model being adopted by the United Arab Emirates in her effort to avoid depending on oil only. This is a condition called the Dutch disease. A situation where a country is over dependent on one economic resource.

Kenya can also learn a lot from Norway, the largest oil producer in Western Europe. The country established a sovereign fund to ensure that the proceeds from Norwegian oil benefits the country’s future generations.

Dubai is home to one of the largest Chambers of Commerce in the globe. Despite its large oil reserve, Dubai is active in other sectors such development of infrastructure and financial services. Dubai is also home to one of the busiest port in the world called Jebel Ali Port. In 2016, the port is reported to have handled 19 million 20 ft containers (TEUs). The port contributes 21% to Dubai’s Gross Domestic Product (GDP).

Currently, Dubai’s crude oil reserves are disappearing but it had made wise decisions from the start. During its boom, Dubai invest a lot on infrastructure. Kenya should note this wise counsel from Dubai.

Kenya has a large port in Mombasa and is currently setting up a second port in Lamu under the LAPSSET Corridor Project.

Experts have pointed out that Kenya should cut on huge public debts and instead used the oil revenues to finance massive projects around the country.

Tourism is currently, Dubai’s largest economic activity. The state receives 17 million visitors per year and projections are to receive 20 million visitors per year by 2020.

Dubai is home to one of mega airports in the world to make it possible for the tourists to land. Out of the 17 million visitors 90 percent are tourists (leisure) and the remaining 10% are visit the state for business.

In comparison, Kenya’s Jomo Kenyatta International Airport (JKIA) has a passenger capacity of 7 million passengers while Moi International airport in Mombasa has 2.4 million visitors per year. This makes it a total of 9.4 million visitors per annum. If Kenya starts getting mega resources from the oil exports, expansion of air transport should be prioritized in order to attract more visitors for business and leisure.

Back to the sovereign fund story, Norway owns the world’s largest sovereign fund currently valued at USD$1 trillion. The fund is invested in the stock market and real estate. The proceeds are used to finance the country’s public budget while the initial capital remains intact for use by future generations. This is what we dream for Kenya and other African oil producers. It can be done.

In Kenya, there are disagreements on how much should the local communities get out of the oil drilled on their land.

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