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Fresh focus on mining sector most welcomed

BUSINESS
By Mbatau wa Ngai | June 25th 2016

The country’s aim of raising earnings from the mining industry from a paltry one per cent to ten per cent of the Gross Domestic Product (GDP) are on course following the enactment of the new mining law which became operational last month. The repeal of the Colonial Act passed 1946 sets the stage for the revolution of an industry that has until now been dominated by foreign carpet baggers and assisted by local wheeler dealers.

Mining Cabinet Secretary Dan Kazungu

Small-scale miners may be excused for celebrating the new law as its members are set to get national and county government’s assistance to buy equipment, according to Mining Cabinet Secretary Dan Kazungu.

Use of mining equipment will not only raise the miners’ incomes, but will also protect them from the myriad of risks associated with their trade particularly during the rainy season when mines are wont to collapse.

The government’s commitment to earn the country increased revenues while also raising the incomes of the players at the bottom of the mining pyramid is further demonstrated by the minister’s assurance that the miners would also be saved from the greedy hands of middle men by being assisted to get a fair market for their precious stones.

Together with individual miners, the county and national governments are set to reap big in several ways providing the provisions of the new law are followed.

First, Treasury’s decision to allocate Sh3 billion in the 2016/17 Budget to the Mining Ministry to finance the first phase of aerial survey to map out the country’s minerals is a welcome demonstration that the government is alive to the dangers associated with commissioning a foreign country—no matter how friendly—to do the job.

It is a matter of deep regret that the government had even considered giving the job to the Chinese because as the saying goes countries do not have permanent friends or enemies but only permanent interests. The government mandarins who had been persuaded that the country would be better served were the Chinese Geological Institute handed the aerial survey ostensibly because Kenya did not have the money to do its own work could not have been more wrong. Be that as it may.

The results of the aerial mapping, which is expected to be carried out in three phases and to cover the entire country, will give the national and county levels of government an upper hand when negotiating with prospective miners, whether local or foreign. Experience from around the globe has shown mining companies to be canny operators who use every trick in the book to get the best deal from less worldly regulators.

Second, the decision to set up a Gemology Centre in Voi Town, which is slated to be completed in December, is yet another demonstration the government is learning from the playbook of other continental neighbours who are still poor despite licensing major global mining companies to exploit their natural resources. A quick trip to Tanzania’s Shinyanga Region provides an object lesson on exactly what to avoid when exploiting natural resources.

There, a small expatriate community lives large while a large contingent of local employees jostle with small-scale miners who are lucky to put a decent meal on the table for their family. What is worse, the Tanzania government is hard-put to determine how much gold or diamonds have been extracted from the ground as the scooped soil is taken to Dar-es-Salaam for outward shipping to South Africa where the precious minerals are extracted. Not surprising, this complicates the calculation of taxes. It is worth noting that the same global mining giants have adopted a totally different approach in Botswana where they not only involve the government but have also set up a diamond centre to rival those found in London, Antwerp and Israel. It comes as no surprise that most of the southern country’s much-vaunted wealth is derived from these minerals. This underlines the reality that lack of skilled man-power should never be used as an excuse to export skilled jobs.

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