What To Protect When Kenya Becomes A Mineral Economy

It no longer is a matter of if but when. Kenya, will officially or not, be declared a Mineral Economy sooner rather than later. Deductions from publicly available information leads me to conclude that Kenya is on course to actualising major mining operations. The formation of the Ministry of Mining, Blue Economy and Maritime Affairs is the biggest hint to Kenya becoming a mining major playing several levels above the artisanal token mining activities we've been used to for long.

There is debate around whether the number 970 is that of the catalogued minerals in Kenya or mineral occurrences from a survey. Whichever is right these stones, metals and gases are exploitable, be they on land or offshore.

The mining policy birthed by the 2010 constitution has seen the formation of a government mining entity in what marks the government now rolling its sleeves to get down to real work. The National Mining Corporation of Kenya is the vehicle through which the government holds shares in mining entities on behalf of the people of Kenya. And, as has happened in Tanzania, our mining sector can grow to contribute 10% or more to GDP.

This article will dwell on the possible scenario missteps that mining portends for the present economic setup more than the nitty gritty in listing the available minerals.

The term 'Dutch disease' came about following the Dutch experience in the 1960s when natural gas was discovered in the Netherlands. With a growing demand for gas, the currency appreciated and exposed the manufacturing and agricultural sectors to the challenges of uncompetitiveness occuring in tandem with a strengthening currency that rendered products from the Netherlands expensive.

This in turn shifted labour and policy making attention to gas, causing deindustrialization and reduced agricultural production. A hitherto diversified economy was compromised as it got exposed to market shocks when other natural gas producers increased supply.

The Nigerian experience wasn't different. Upon the discovery of oil, the government switched attention to oil at the expense of agriculture. This resulted in overdependence on a single sector as food imports became the norm rather than the exception in an agriculturally endowed country. The resource curse set in.

The Kenya shilling undoubtedly is held firm largely by the dollar inflows from tea sales. Coffee, horticulture and floriculture contribute heavily to Kenya's economy, now a continental giant officially recognised as Africa's 6th largest economy out of fifty four countries. The shilling has settled at a point that encourages exports. Mining will tilt the balance if agricultural subsidies are not introduced to cushion the majority of the population from the potentially harmful Dutch disease.

The catch-22 situation we find ourselves in when balancing developmental spend and debt repayment will tempt the government into favouring huge mining inflows because for every ten shillings collected in government revenue, nearly eight shillings go to debt settlement, leaving two shillings to development and recurrent expenditure, before forced leakages are factored in. The government will want a faster settlement of debt.

In the frustrating absence of campaign promises manifesting at expected speeds and levels, the government is forced to seek quicker solutions which inevitably revolve around more money needed to make all promises come true. And mining is that possible quick fix.

We welcome the increased contribution of mining to the economy albeit at a pace that compliments rather than dethrones the existing sectors and doesn't set the stage to send them into oblivion.

We have proudly been an above-the-ground economy literally mining from our heads and adding to GDP for most of our existence. But the time to become a mixed economy balancing above-the-ground and underneath-the-ground value adding activities complementing agricultural efforts is at hand. Whichever way, that spares us the crippling effects of economic mulnourishment or constipation, for either belch is hard to withstand.

Boom times are known to carry along new habits. A rags-to-riches situation brings with it an excitement that could breed unnecessary civil disobedience, for some of the peace we enjoy today is partly the work of a poverty-induced recess on citizens democratic activity and should be rightly interpreted as latency pending sponsorship or the financial boosting from new inflows such as unfathomed mining sector windfalls. The potential risks associated with Incomes earned without hard work or heavy investments by citizens must be attended to urgently by the government. Futurists, as happens in America can help out with anticipating and satisfying possible scenarios, hence averting any possibilities of full scale occurences manifesting under uncontrollable circumstances.