How CS Joho seeks to transform Kenya's mining sector

Kenya’s mineral resource has emerged as a promising frontier even as the National Treasury plots to generate additional revenues for the government.

Cabinet Secretary for Mining, Blue Economy and Maritime Affairs Hassan Ali Joho says the mineral resource can plug in the budget deficit, clear the national debt and ease the tax burden for taxpayers.

Achieving such noble goals demands the navigation of formidable challenges that have crippled Kenya’s mining ecosystem for decades.  

The CS is eyeing radical steps aimed at streamlining internal and external factors and optimising mineral investments’ potential for increased revenue generation.

"Mining is a bedrock for Kenya’s economic growth. If well managed, this resource can settle our debt and yield revenues to spur national development," Joho said.

The mining sector contributes one per cent to the national GDP with projections showing the sector’s contribution can rise to 10 per cent.

Current mining performance indicators reveal a sector emerging from operational doldrums with mineral export data for the year 2022/2023.

This posts a positive growth of 5.9 percent valued at USD 471 million.

Revenue from royalties also surged from Sh1.6 billion in 2019 to Sh3.7 billion by June 2023.

The CS has adopted a multi-pronged approach, touching on boosting revenue collection, reviewing mining laws, incentivising new investors, promoting artisanal miners and fighting illegal mining.

This aims to capitalise on this growth.

Illegal mining remains a major threat that denies the government billions in revenue.

It causes environmental degradation and is blamed on the prevalence of abandoned quarries that are hazardous to lives and property. 

To date, over 3,000 illicit operations have been stopped in a relentless campaign to eradicate this illegality.

The vice continues owing to a dearth of enforcement capacity and a lack of coordinated response by state agencies.  

While equating illegal mining to economic sabotage, the CS says the wanton plunder of Kenya's minerals without remitting royalties must never go unpunished.

“Minerals get depleted. Not paying royalties is tantamount to killing our future generations. This must stop,” CS said.

To eradicate illegal mining, the CS calls for the involvement of security agencies in counties.

He said that illegal mining or dealing should never occur when law enforcement organs are vigilant.

He added that county security agencies must ensure criminal activities, especially illegal mining are eradicated and perpetrators dealt with.

“Illegal mining is a crime. The security agencies on the ground should treat it as a criminal activity,” Joho said.

In Joho’s cross-hairs, some investors owe the government hundreds of millions in unpaid royalties.

In a recent meeting in Kisumu, Joho said arrears must be cleared. He said investors will get a fair payment plan to settle their debts.

He also hinted that the government is going after investors who had closed shop after depleting their minerals.

"Some investors made huge profits and left the sector without paying a coin. They must pay what they owe to Kenyans," he said.

Such interventions point to a new dawn for the mining sector.

The pervasiveness of conflicts, communities’ discontentment, quarrels over land consent and manifest hostility between investors and landowners jeopardise mineral investments in Kenya.

In Taita-Taveta, the fate of a Sh10 billion iron ore project hangs by a thread after disgruntled community members moved to court, challenging the legality of the project.

In Nandi, a dispute between a gold investor and a section of the community is raging while another such conflict is ongoing between a copper investor and a local community in Kitui.

Joho said a lasting remedy lies in the full involvement of host communities in investment decisions.

He said that community exclusion foments hostilities thereby threatening billions in potential investments.

“Involvement of people and community acceptance is the basis for any investor’s license approval. Communities must be at the heart of investments,” he said.

To foster inclusion, the state is looping in artisanal miners to drive the government's empowerment agenda.

Kenya has over one million artisanal miners who are joining marketing cooperatives.

The miners will benefit from the allocation of mining zones, training and capacity-building, technical support and linkages to markets.

Under the Whole-of-Government approach, the CS says his ministry will work with National Environmental Management Authority (NEMA), to review the high levies for licenses to artisanal.

Cooperative officials will train miners on sacco benefits while technical and vocational institutions will provide tailor-made short courses on mining, health issues, marketing and finances for artisanal miners.

“We are committed to giving artisanal miners full support to boost their work. When we allocate mining zones for the large-scale investors, we will also allocate to artisanal miners for inclusivity,” he said.

While warning against speculation and arbitrary sale of mineral rights, the CS said investors holding vast lands without mining will have to give a reason not to have their licenses revoked.  

To address delays in remitting royalties to counties, the CS calls for amending the Mining Act 2016 to have prompt payment of royalties. 

The law directs royalties to be shared between the national and county governments and the community at the rate of 70, 20 and 10 per cent respectively.

The money is collected by the treasury for distribution.

Joho said counties and communities should not be made to wait for their share while the investor has already made his profits from mineral sales.

“We are eliminating delays. Communities and counties must get their money first before the investor makes his sales and profits,” he said.

This approach, the CS argues, will encourage county governments to use their resources to fight illegal mining operations in their regions.

This is because they are assured of getting immediate benefits from the local licensed mineral resource.