http://subseaworldnews.com/2011/11/04/kenya-plans-to-delineate-more-exploration-blocks-offshore/
http://ilri.org/infoserv/Webpub/fulldocs/mappingPLDW/media/71.htm
Kenya could strike significant quantities of oil in the most marginalized counties, where over 50-80 percent of the population lives below the poverty line. This uncanny overlap struck me when I looked at the poverty headcount based on the 2009 census data along side the current oil exploration blocks ( refer to maps above) located in counties such as Turkana, Baringo, Kisumu, Mandera, Wajir, Garissa, Tana River, Lamu, Kilifi and Kwale.
For these hitherto marginalized counties, the discovery
of oil is perceived as the definitive signal that the long shadow of poverty is
finally passing. However, analysis of the
experience of Africa’s resource rich countries demonstrates that oil wealth
does not correlate well with socio-economic prosperity. On the contrary, oil
rich countries often perform worse than their resource-poor peers in terms of
human development, governance and long-term economic growth. This phenomenon is
known as the “Resource Curse”.
Resource rich countries that experience the resource
curse tend to be weak at harnessing such resources to benefit their economies
and populations. Invariably, the resource curse is associated with low economic
growth, deeper poverty, widening inequality, civil strife and more authoritarian
government.
Three explanations have been offered for the
resource curse. First, large oil export revenues often cause the local currency
to appreciate against other currencies making non-oil related goods and
services less competitive, crowding out local manufacturing and agriculture.
Second, volatility of oil revenues through cycles of booms and busts often
wreck havoc, with devastating consequences for fiscal planning and economic
governance. Third, oil wealth tends to make governments more authoritarian and
unaccountable to their citizens. Recent studies show that in a majority of
African countries oil discovery invariably leads to increased corruption and
competition for vital state resources by political and ethnic elites.
Kenya has a window of opportunity to
institute appropriate institutional mechanisms to leverage its hydrocarbon
wealth for economic transformation and avoid the resource curse. Recent
developments are reason for optimism. With support of the World Bank the
government is committed to reviewing legal, regulatory and fiscal framework for
effective, inclusive and transparent management of oil and gas resources. Furthermore,
the government is working with the World Bank to harness hydrocarbon resources
to support domestic growth and forestall adverse macro-economic and social
impacts.
However, Kenya is neither a compliant nor
candidate country for the Extractive
Industries Transparency Initiative (EITI). The aim of EITI is to ensure that
all revenue payments by oil, gas and mining companies are independently verified
and disclosed to the public, thus helping citizens to exercise oversight,
increase transparency, and reduce the risk of corruption and mismanagement.
In the absence of EITI, the disclosure
requirement by the European Union (EU) could help improve the transparency of
payments made to the government by the extractive industries. Thanks to Tullow Oil’s special report, whose
release to the local media was meticulously executed, we know that the
Anglo-Irish firm paid KES1.9 billion to the exchequer. Such disclosure provides
civil society and local communities with the information they need to hold the government
accountable for income made from exploiting oil resources. Although critical, EU
mandatory disclosure requirement alone is not sufficient for transparency.
Kenya must be strongly encouraged to adopt the EITI process.
Social investment of by extractive industries
is also critical to averting a resource curse. Starlon Ikaal, petroleum
engineer at Tullow Oil, is an outstanding role model to thousands of young
Turkana boys and girls. Ikaal is one of the 25 Kenyan students who benefited
from Tullow Oil’s KES 125 million-scholarship scheme. Although modest, Tullow
Oil’s leadership through the scholarship scheme demonstrates the transformative
power of enlightened social investing. Ikaal’s is a story of transformation,
especially in a county where 82 percent of the population has no education and
less than 6 percent of the population work for pay.
Five safeguards are critical to avoiding the
resource curse. These include: 1) a petroleum revenue management framework,
including a sovereign wealth fund with a cap how much oil revenue is allocated
to the national budget; 2) revenue sharing informed by distributive policies, taking
into account the crippling poverty levels in resource rich counties; 3) a local
impact investment alliance, which brings together the county government, community
groups, extractive industries, private sector and donors to focus on
transformative social and economic projects; 4) establishment of extractive
sector-civil society transparency oversight; 5) requirement of parliamentary
approval of all mineral, gas and petroleum agreements.
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