Discovery of minerals, gas and oil in many African countries has led to what economists call the "paradox
of plenty" - a phenomenon in which macroeconomic forces create pressures for over-reliance on an energy
or a mining sector, leaving other domestic economy sectors to deteriorate.
The Democratic Republic of Congo (DRC), which was called a "geological scandal" because of its vast
concentration of minerals, and Nigeria have become the poster children of what is wrong with oil and
mineral discoveries in Africa. Both countries despite having huge mineral and oil deposits have failed to
derive dividends from them.
Further, domestically, the discovery and exploitation of the mineral has led to "resource nationalism" -
communities calling for a lion share, especially in peripheral regions long marginalised by the centre, which
is often the case.
Kenya and Uganda recently discovered economically viable oil deposits, following years of being the sleepy
backwater of global oil production. Following the discovery of oil in Kenya and Uganda, and gas in Tanzania
the region was heralded as the next frontier of gas and oil production.
Uganda became the first country in East Africa to discover oil in the Albertan region West of the country in
2006. Then Kenya discovered oil in Turkana, northwest of the country, close to the South Sudanese and
Ethiopian borders. Recently, the British Oil Company Tullow announced it has discovered what is thought to
be 600 million barrels. This is the first time an economically viable oil reserve has been discovered in
Kenya, although the country has been exploring for oil since the 1950s.
Managing expectations
There is a huge divide between discovery and full exploitation; in most cases governments have reasons to
overstate the discovery, but such a move is accompanied by tremendous level of expectation, especially
from the local community.
In Kenya's case, paradoxically, the North Rift Valley and part of Northern Kenya where oil has been
discovered are two areas that have been neglected by successive governments. The two regions
development indicators are shocking.
For instance, if you live in Nairobi, you are 15 times more likely to access secondary education as opposed
to if you live in Turkana County. A report released by the society for international development in 2013,
shows that poverty in Turkana is as high as 87.5 percent .
Such longstanding grievances about the central government's neglect were manifest even before the
exploitation of the oil has started. With the promise of an oil wealth, these disturbances would only grow
more frequent. Youth and community leaders in the Turkana County have demonstrated against unfair
recruitment practices by Tullow Oil Company. The government and the oil companies working in Turkana
will have to navigate the undeniable history of longstanding marginalisation of the community and the
demands for benefits from the local community.
Any signs of "exploitation" will not be seen as a stand-alone issue, but rather a historical continuation of
disenfranchisement policies of the past.
State presence and community's grievances
Kenya's post-independence development plan was predicated on the "trickle-down effect" - develop the high
potential regions, and the trickle down from these regions will spread to the low potential regions. Never
mind that arbitrary demarcation of what constitutes "high potential" and "low potential" is highly
problematic and has often been decided upon by whoever was in power.
During the period when marginalised regions were in the "purgatory", awaiting the trickling down, the
government did little to invest in their development. In the case of Turkana and adjoining areas, the
government only took into consideration when security concerns arose.
The fact that the majority of the people in this region are
pastoralists didn't help at all. Those in power, who come
predominantly from farming communities, see pastoralism as
a mode of livelihood that is anachronistic and at odds with
"modernity".
Since the state was hardly present, the local communities
armed themselves largely to protect themselves from cross
border cattle raids. But over time, cattle raiding, which was
meant to be a rite of passage among many pastoralist
communities, has evolved into large-scale commercial
enterprises. It is no longer guided by the social norms
enforced by the traditional leaders. Further, the weapons
involved are no longer bows, arrows and spears, but guns and
ammunition. The area is awash with small arms. Because of the economic incentive, cattle raiding has
become increasingly bloodier.
Transparency and community involvement
The trust deficit between the community and Kenya's government makes it critical for both the authorities in
Nairobi and the Tullow Oil Company to engage with the locals. This should not be done as a PR exercise,
but as genuine sustainable effort. Long-standing community grievances, mixed with easily available
weapons, is a poisonous mix, which, if not addressed could, undermine the further exploration and
exploitation of the oil.
At the national level, the Kenyan government and the oil companies need to abide by the international best
practices of transparency regarding the contracts. Tullow Oil needs to publish what they pay, and the
government should make public the contracts it has signed. The reason most of the African countries are
failing to get the best out of their mineral resources is because a huge chunk of the industry's activities are
shrouded in secrecy - a mutually benefitting environment for the oil companies and the government. This
leads to patronage, corruption, and unfair business, while also inflicting long-term environmental damage
and conflict within communities.
Finally, Kenya needs to establish a sovereign wealth fund similar to Norway that could serve two functions.
One, at the local level, the fund should be used to economically empower the Turkana community; two, at
the national level, the fund could be used for various social projects.
Once Kenya negotiates some of these issues, oil discovery will catapult Kenya into an economic
powerhouse not only in East Africa, but the whole of of the continent.
Abdullahi Boru Halakhe is a Horn of Africa security analyst.
Culled from www.aljazeera.com/indepth/opinion/2014/05/avoiding-resource-curse-kenya-2014517115053638503.html
of plenty" - a phenomenon in which macroeconomic forces create pressures for over-reliance on an energy
or a mining sector, leaving other domestic economy sectors to deteriorate.
The Democratic Republic of Congo (DRC), which was called a "geological scandal" because of its vast
concentration of minerals, and Nigeria have become the poster children of what is wrong with oil and
mineral discoveries in Africa. Both countries despite having huge mineral and oil deposits have failed to
derive dividends from them.
Further, domestically, the discovery and exploitation of the mineral has led to "resource nationalism" -
communities calling for a lion share, especially in peripheral regions long marginalised by the centre, which
is often the case.
Kenya and Uganda recently discovered economically viable oil deposits, following years of being the sleepy
backwater of global oil production. Following the discovery of oil in Kenya and Uganda, and gas in Tanzania
the region was heralded as the next frontier of gas and oil production.
Uganda became the first country in East Africa to discover oil in the Albertan region West of the country in
2006. Then Kenya discovered oil in Turkana, northwest of the country, close to the South Sudanese and
Ethiopian borders. Recently, the British Oil Company Tullow announced it has discovered what is thought to
be 600 million barrels. This is the first time an economically viable oil reserve has been discovered in
Kenya, although the country has been exploring for oil since the 1950s.
Managing expectations
There is a huge divide between discovery and full exploitation; in most cases governments have reasons to
overstate the discovery, but such a move is accompanied by tremendous level of expectation, especially
from the local community.
In Kenya's case, paradoxically, the North Rift Valley and part of Northern Kenya where oil has been
discovered are two areas that have been neglected by successive governments. The two regions
development indicators are shocking.
For instance, if you live in Nairobi, you are 15 times more likely to access secondary education as opposed
to if you live in Turkana County. A report released by the society for international development in 2013,
shows that poverty in Turkana is as high as 87.5 percent .
Such longstanding grievances about the central government's neglect were manifest even before the
exploitation of the oil has started. With the promise of an oil wealth, these disturbances would only grow
more frequent. Youth and community leaders in the Turkana County have demonstrated against unfair
recruitment practices by Tullow Oil Company. The government and the oil companies working in Turkana
will have to navigate the undeniable history of longstanding marginalisation of the community and the
demands for benefits from the local community.
Any signs of "exploitation" will not be seen as a stand-alone issue, but rather a historical continuation of
disenfranchisement policies of the past.
State presence and community's grievances
Kenya's post-independence development plan was predicated on the "trickle-down effect" - develop the high
potential regions, and the trickle down from these regions will spread to the low potential regions. Never
mind that arbitrary demarcation of what constitutes "high potential" and "low potential" is highly
problematic and has often been decided upon by whoever was in power.
During the period when marginalised regions were in the "purgatory", awaiting the trickling down, the
government did little to invest in their development. In the case of Turkana and adjoining areas, the
government only took into consideration when security concerns arose.
The fact that the majority of the people in this region are
pastoralists didn't help at all. Those in power, who come
predominantly from farming communities, see pastoralism as
a mode of livelihood that is anachronistic and at odds with
"modernity".
Since the state was hardly present, the local communities
armed themselves largely to protect themselves from cross
border cattle raids. But over time, cattle raiding, which was
meant to be a rite of passage among many pastoralist
communities, has evolved into large-scale commercial
enterprises. It is no longer guided by the social norms
enforced by the traditional leaders. Further, the weapons
involved are no longer bows, arrows and spears, but guns and
ammunition. The area is awash with small arms. Because of the economic incentive, cattle raiding has
become increasingly bloodier.
Transparency and community involvement
The trust deficit between the community and Kenya's government makes it critical for both the authorities in
Nairobi and the Tullow Oil Company to engage with the locals. This should not be done as a PR exercise,
but as genuine sustainable effort. Long-standing community grievances, mixed with easily available
weapons, is a poisonous mix, which, if not addressed could, undermine the further exploration and
exploitation of the oil.
At the national level, the Kenyan government and the oil companies need to abide by the international best
practices of transparency regarding the contracts. Tullow Oil needs to publish what they pay, and the
government should make public the contracts it has signed. The reason most of the African countries are
failing to get the best out of their mineral resources is because a huge chunk of the industry's activities are
shrouded in secrecy - a mutually benefitting environment for the oil companies and the government. This
leads to patronage, corruption, and unfair business, while also inflicting long-term environmental damage
and conflict within communities.
Finally, Kenya needs to establish a sovereign wealth fund similar to Norway that could serve two functions.
One, at the local level, the fund should be used to economically empower the Turkana community; two, at
the national level, the fund could be used for various social projects.
Once Kenya negotiates some of these issues, oil discovery will catapult Kenya into an economic
powerhouse not only in East Africa, but the whole of of the continent.
Abdullahi Boru Halakhe is a Horn of Africa security analyst.
Culled from www.aljazeera.com/indepth/opinion/2014/05/avoiding-resource-curse-kenya-2014517115053638503.html
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