We should not give away our mines for a bowl of soup

By Moses Kuria

Twitter: @HonMosesKuria

Sh1.6 trillion. That is the size of the 2013-2014 budget that was approved by the National Assembly as presented by Cabinet Secretary Henry Rotich. Nowhere in the world is a budget financed totally from domestic tax collection.

You have to factor in other sources like government investment income, sale of state assets as well as domestic and foreign borrowing.

Even after factoring in these sources, over 95 per cent of world budgets are still left with a gap-the budgetary deficit-and which is always expressed as a percentage of the Gross Domestic Product (GDP).

Sh8.5 trillion or $100 billion. That is the value of the rare earth mineral deposits in Mrima Hills in Kwale County that was announced recently.

Assuming-and this is overly simplifying the subject matter-that we were to donate the mineral deposits to Mr Rotich and his team at the National Treasury and the Kenya Revenue Authority. Assume that we authorise him to exploit the mine and cover the national budget from the Sh8.5 trillion. What would this mean to mwananchi? It would mean that up to June 30, 2020, if we just get contented with the Sh1.6 trillion annual spend, no Kenyan would pay any taxes, whether personal, excise or corporate! It means we do not have to sell any public assets.

It implies that we do not borrow a coin either from the domestic market or from abroad. It means that state corporations and other public investments can re-invest the dividends they remit to the Treasury thus fuelling maddening growth never seen in the Southern Hemisphere. Yes, Sh8.5 trillion is not pocket change; it can run this country for more than half a decade.

Yet Sh8.5 trillion is what an unheralded company that goes by the name Cortec wants to keep all to itself. No, that is not fair to Cortec. They have expressed a willingness to donate 3 per cent of the proceeds to the 40 million poor souls in Kenya. That donation in mining parlance is known as royalty. In case we get really broke, Cortec has indicated it may not have a problem giving us some few pennies in the form of mining fees. This may help to buy food, at least for children if not for adults.

For the last 50 years, our nation has depended on the only minerals that we knew of-our human resources. It is the hard work by our men and women in the farms, in Jua Kali industries, in trade and transport, in all spheres of our national endeavour that has taken us to where we are.

For 50 years, we could only salivate with jealousy at the oil and mineral resources that our God has bequeathed our friends in the Sudan, South Africa, Democratic Republic of Congo etc. That was until late last year when we were pleasantly shocked to learn that we have economically viable quantities of oil in Turkana. In short order, news of more oil discoveries in the Kerio Valley, Lamu Basin and the Somalia border were broken. We thought that the Kenyan file has finally reached to God’s in-tray by way of oil wealth.

What we did not know is that there is an equally amazing story in the minerals sector. Until the Jubilee government created a stand-alone Ministry for mining, most Kenyans did not know that we have minerals worth calling that name. We only heard of rudimentary gold mining in Migori and Ikolomani and a boring Titanium turf wars soap opera at the Coast.

 It would now appear that it’s only Kenyans who were ignorant of our mineral wealth. Some Western companies like the curiously named Pacific Wild Cat of Canada, the mother company of Cortec knew what we were sitting on. While we were busy shouting at each other along ethnic and political lines, the Cortecs of this world were busy accumulating mining concessions for a pittance. In 2013 alone, 31 licences had been issued to an assortment of characters that included one Aliko Dangote, the richest Man in Africa who flew in here at night, on a private jet, for a one-hour visit to the home of a leading but unsuccessful presidential candidate in February.

Thank God for little mercies. Najib Balala has revoked all these licences and reviewed the ownership, fees and royalty structure for the benefit of the Kenyan people. They are now aiming their guns on him but it is too late.

Funny that even Tata Chemicals who have been shipping away our Magadi soda ash for practically nothing are supporting the likes of Cortec. If one mine can run this country for six years, surely we should not give away our mineral wealth for a bowl of soup.

 

The writer comments on public affairs and policy matters

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