REPUBLIC OF KENYA

MINISTRY OF MINING
KEYNOTE ADDRESS BY HON. NAJIB BALALA, EBS, CABINET
SECRETARY

FOR

MINING,

REPUBLIC

OF

KENYA

DELIVERED DURING THE OPENING SESSION OF AMERICAN

BAR

ASSOCIATION

2015

POLICY&FRAMEWORKS

AFRICA

FORUM:

LEGAL

SURROUNDING

THE

ENERGY&EXTRACTIVE INDUSTRIES IN AFRICA WITH A

FOCUS ON EAST AFRICA,

4TH-5TH JUNE 2015 AT SAROVA

PANAFRIC HOTEL, NAIROBI, KENYA.

THE EXTRACTIVE AND ENERGY SECTORS IN EAST AFRICA:
AN OVERVIEW OF SPECIFIC LEGAL AND REGULATORY
FRAMEWORKS

Marcelo Bombau, Chair of the ABA Section of International Law

Eric Mutua, Chair of the Law Society of Kenya
Distinguished Guests
Participants
Ladies and Gentlemen

The Extractive Industry in Kenya, and the larger East Africa is a legal
minefield for the Governments and people of these regions. It is an
industry which has great potential to benefit the people, and on the
flipside, it has a great risk of possible conflicts and turmoil from the so
called mineral curse.
Africa has forty per cent (40%) of the worlds minerals, but every year,
150 Billion dollars of this wealth is lost, hence it is currently not
benefitting the continent. In the East African regions and by extension the
whole of Africa, the extractive sectors are governed under a multiplicity
of legal, policy and fiscal regimes.
In Kenya, the countrys economy has remained dependent on agriculture
for decades. But today, the Government has moved its focus to other key
development and socio-economic drivers and one of these sectors is the
extractive industry. Towards realization of this, the Government has put
in place institutional, legal and policy frameworks to transform the
extractive industry. Accordingly, for the first time in Kenyas history, a
full-fledged Ministry of Mining was established in 2013, underscoring
this shift and renewed focus on the role of the sector in national
development.
The Kenya National Development Blue Print, Vision 2030 specifically
aims to see Kenya as a centre of the extractive industry. Vision 2030 sees
the extractive sector, and specifically minerals and mining as a priority
making significant contribution to the Visions goals. The mining sector
has been identified as one of the sectors with the potential to contribute
significantly to ten (10) per cent economic growth envisioned in the
Vision 2030.

Currently, mining contributes about one per cent (1%) to the country's
Gross Domestic Product (GDP) and about four per cent (4%) of the
countrys total Exports. This GDP contribution is expected to rise
significantly to three (3) per cent by 2018 and contribution to Export
earnings to rise upto ten per cent (10%) by 2030. In addition, the sector
will contribute 100,000 jobs directly and indirectly over the next 7 years
and spur economic growth through infrastructural development, industrial
development and foreign exchange earnings.

The mandate of the Ministry includes;

Mineral Exploration and Mining Policy and
Management
Inventory and Mapping of Mineral resources;
Mining and Minerals development
Policies on Management of quarrying and mining of
rocks
Management of health conditions and health and
safety in mines
Policy around extractive Industry
Resource surveys and remote sensing; and
Maintanence of geological data ( research, collection,
collation and analysis).

Policy around Extractive Industry

Among the challenges facing the industry include weak policy and
regulatory framework. These are some of the strategic issues the
government is seeking to address through reforms in the extractive sector.
These reforms include formulation and implementation of policies, laws

and regulations governing the extractive industry, commercial explosives

and geo-information services.
Policy and Legal Reforms
Minerals have the potential to become a blessing rather than a curse
for our people. Hence the Government is aware and responsive to the
need to put in place policy and legal frameworks to ensure benefits for
the people, and ensure a balance with the investors. Kenya has
accordingly developed a new law under the Mining Bill 2014. The
Minerals and Mining Policy and the Mining Bill 2014 will help repeal
the existing legislation relating to mining which was enacted in 1940. The
Bill has been approved by the Cabinet, passed by the National Assembly
and is currently before the Senate. Once enacted into law, the new Mining
Act will enable the Ministry to establish a simple, clear, transparent, and
predictable legal regime for the management of mineral resources,
streamline mining in the country and increase the contribution of mining
to the Gross Domestic Product, increase employment opportunities and
spur economic growth and development in the mining areas.
The Mining Bill 2014 has proposed a formula to share benefits accruing
from mineral resources between National and County level governments,
and the local communities living in mining areas on a 70:20:10 ratio
respectively. The formula ensures equitably sharing of mineral benefits
shared to spur economic development of the rural areas where the
minerals occur. Further, out of the 70% royalties share for the National
Government, 50% will go to a Sovereign Fund, and 50% to
Infrastructure. The Bill will soon be enacted into law to provide impetus
and momentum to propel the minerals and mining sector to new heights.

We must all be aware that minerals are a finite resource. This therefore
calls for Transparency and accountability in the extractive industry to
ensure that the people benefit from the mineral resources. Accordingly,
the legal, fiscal and policy frameworks being put in place by the
Government are to ensure that we benefit from mineral resources, and
that future generations also benefit from these resources long after they
are depleted.
The Formal Recognition of Artisanal Mining
Currently, artisanal mining is illegal in Kenya. Like many
countries in Africa and other parts of the developing world,
this has been formally recognised and will become legal
once the bill is passed. This will now make it possible for
thousands of artisanal miners scattered across Kenya
especially in areas like Migori, Taita Taveta and Turkana to
carry out their operations without being arrested and also
carry out their work in an environmentally very friendly
manner. The National Mining Corporation will be
coordinating and marketing artisanal mining products so
as not to be exploited by brokers.

Government Equity and Local Participation

Under the Mining Bill 2014, Government will have a 10%
equity in large scale mining operations. Government also
has the right to aquire an additional interest on the terms
and conditions to be agreed with the holder. The state
intends to create a National Mining Corporation to invest
on behalf of the state. Furthermore, holders of mining

licences are required within four years to also list at least

20 % of their equity on the local stock exchange. Here is
where Kenyas can participate in the stock market in a
transparent manner and companies can raise funds locally.

Accountability and Transparency

The bill contains by far some of the most comprehensive

provisions on transparency that may be found in any
mining law. All mineral agreements are required to be
published. Furthermore, the new regime will require us to
develop a transparent and accountable mechanism of
reporting mining and mineral related activities in Kenya.
These reporting requirements are likely to cover revenues,
payments, production volumes, contract disclosure, types
and number of licences or permits granted among several
others.
A Regional Initiative
East Africa, and Kenya is committed to a transparency initiative that is
home grown and accountability to both government and investors jointly.
It is important that government declare how much it receives from
investors but also important for multinational to give to the government
and communities their rightful compensation.

Accordingly, the Southern and Eastern Africa Mineral Centre (SEAMIC),

which was recently renamed African Mineral and Geo-Science Centre
(AMGS), has proposed that African countries start harmonizing their
legal regimes, fiscal regimes and policy statements on how they are going
to extract minerals in the continent. This is particularly with the view of
creating jobs and industrializing our continent by adding value to the
minerals rather than exporting them in a raw form.

Transparency and Accountability-A Case for Kenya

In Kenya, the Ministry of Mining has put in place an Online
Transactional Cadastre Portal to promote transparency, accountability and
integrity in all online applications for mining licenses.
The ministry in consultation with relevant government agencies such as
Attorney General Chamber, Parliament and Cabinet will formulate and
implement policies, laws and regulations governing the mining sector.
Once the policies and bills are developed or reviewed and approved by
relevant authorities, the sector players will be well coordinated, managed
and regulated. Among the policies and bills to be developed include:
Explosives Policy and Bill to repeal Explosives Act
National Remote Sensing Policy and Bill
Extractive Industry Policy
Mine Health, Safety and Environment Guidelines
Accordingly, the new law takes note of this fact.
Review and enact appropriate policies and laws to make Kenyas
mineral and mining sector competitive;

Involve the local community and by ensuring at least a percentage of

royalties is invested in the communities to significantly improve their
wellbeing.

Legal and Policy frameworks reforms.

It is our firm belief that the extractive sector will only be beneficial for
our region, only if the legal, policy and institutional frameworks focus on
ensuring that the people gain from its benefits. And this can only be done
if these reforms put in measures to balance the benefits to the people,
with the interests of the investors, in a win-win situation for all.
In conclusion we want to thank the American Bar Association for
organizing this event, but I urge you to be proactive and cognizance that
any lop-sided agreement signed by Government and multinational is
detrimental to the extractive industry, a recipe for chaos and a curse to the
people. We appeal to the legal fraternity and stake holders to have
balanced arrangements that will benefit both parties
Thank you very much for inviting me and GOD BLESS.

Thank You All.