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Storm over missing clause on sharing mining wealth

BUSINESS
By ALLY JAMAH | Jun 1st 2014 | 4 min read
By ALLY JAMAH | June 1st 2014
BUSINESS

By ALLY JAMAH

A miner prospects for gold in Ikolomani, Kakamega. The new Mining Bill 2014 doesn’t have royalty-sharing clause.

A storm is brewing between the national government and counties over a proposed law that excludes a formula for sharing proceeds from minerals.

The latest version of the Mining Bill 2014 published in March this year by the Mining ministry excludes a crucial royalty-sharing formula between the entities.

The Mining Bill of 2013 had proposed that 75 per cent of the proceeds would go to the national government, 20 per cent to counties and 5 per cent to local communities. But this key provision was curiously dropped from the Mining Bill 2014, a move that is causing disquiet among stakeholders.

The Bill went through first reading on April 22 and is awaiting 2nd reading upon resumption sessions of the National Assembly from 3rd of June 2014.  The Parliamentary Committee on Environment led by Amina Abdallah is currently receiving submissions from stakeholders on the bill. Ms Abdallah expresses confidence that the royalty-sharing clause may be restored in the Bill by the Committee before it is introduced to the house for debate. “We will review all the submissions made by the stakeholders before making the decision. But the final decision will be taken by the whole house,” she said.

Senate Majority Leader Prof Kithure Kindiki says any mining bill that has no specific provisions for royalty sharing would be against the Constitution and would face resistance from Senators, counties and local communities. He took a swipe at the Mining ministry for seeking to sideline the Senate from debating the bill by classifying it as one not concerning counties. “The mining is done in counties and community land, and the proceeds must be shared accordingly. We don’t want the sharing of royalties to be done at the whims of the national government. It should clearly be anchored in the law,” he asserts.

Reinstate clauses

Prof Kindiki is pushing for counties to receive at least 30 per cent of the mining royalties for such resources to help develop the grassroots.

On his part, governance specialist for the World Wide Fund for Nature (WWF-Kenya), a nongovernmental organisation concerned with environmental conservation and sustainable development says that apart from royalty-sharing agreements between the two levels of government and local communities, it should also include clear mechanisms through which funds going into local communities can be absorbed. “Currently, there are no systems in the Bill through which local communities can deliberate and invest projects from the royalties which they are supposed to be receiving. Without this inclusive mechanism in the Bill, it would be difficult for local communities to benefit from mining proceeds in their areas,” he says.

He adds that the royalty-sharing formula should not be arrived at arbitrarily but be left to the Commission for Revenue Allocation (CRA) to determine it.

CRA accuses the ministry of disregarding its revenue sharing proposals in the Mining Bill 2014. The Bill, which is before the National Assembly, lacks proposals on how to share revenue between locals, county and the national government, something that has prompted CRA Chairman to raise issue with Mining Cabinet Secretary Najib Balala. CRA’s Chairman Micah Cheserem has written to Cabinet Secretary for Mining Najib Balala asking him to reinstate revenue-sharing clauses the Commission had proposed in the Bill.

serious backlash

“It has now been brought to our attention that the Mining Bill being debated by the National Assembly does not include a revenue sharing formula,” CRA Chairman Micah Cheserem said in a letter addressed to Balala, dated May 22. Mr Cheserem said the formula must be included in the Bill because minerals will in the coming years be a major source of revenue.

Senator Agnes Zani, who chairs the special Senate committee on royalties from minerals says that although the Senate has published another bill that gives communities 40 per cent of royalties from minerals, the resource sharing provision should not be left out in the Mining Bill that is before MPs of the lower house. The Senate bill has gone through the first reading. She also called for the Mining Bill 2014 to be passed through the Senate so that they can take care of the interests of the counties, for minerals located in their areas.

“All bills on natural resources such as minerals, wildlife, forests, oil and gas must have robust royalty-sharing formula with county governments and local communities. Otherwise there will be a serious backlash from the grassroots,” she says.

Commission for the Implementation of the Constitution’s Dr Ibrahim Ali has called on the Parliamentary Environment Committee to include the provision in the Bill, since it had been arrived at after many consultations with stakeholders. “We hope that as the Committee deliberates on the Bill, such a key provision on sharing of royalties between different levels of governments and local communities cannot be left out. That would not be consistent with the Constitution,” he said.

Kenya Chamber of Mines Chairman Adiel Gitari said the Mining ministry has not explained to stakeholders the reasons behind the removal of the royalty-sharing formula, leaving many people baffled.

“The national government should not be seen as being reluctant to share resources from minerals with structures in the grassroots,” he says.

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