World Bank seeks stake rule on mining in Kenya dropped
The World Bank is seeking a stake rule on mining firms in Kenya to be dropped. The current Mining Act of 2016 in Kenya mandates that foreign mining companies must cede 35% of their mining operations to Kenyan entities.
According to the World Bank’s Africa’s Resource Future report, the policy of requiring local equity is seen as a deterrent to investments, resulting in potential revenue losses for the country. Lack of extensive data on mineral deposits in the country and other factors have contributed to limited productivity and foreign exploration companies being discouraged from investing due to poor infrastructure and an outdated legal framework.
Regulatory framework
The World Bank suggests that Kenya should develop a mining regulatory framework that promotes regional equity. This means expanding local equity to a regional level, allowing medium-sized regional mining firms to emerge. These firms would have the capital to invest and the interest in investing in various African jurisdictions, potentially increasing investments in Kenya’s mining sector.
Despite having proven deposits of minerals such as titanium, gold, coal, copper, niobium, manganese, and rare earth minerals, Kenya’s mining sector’s contribution to the national economic output has remained low. The sector’s contribution to GDP has stagnated at less than one percent over the years.
The World Bank report also highlights that many countries worldwide capture only about 40 percent of the revenue they could potentially collect from their natural resources. By revising the mining regulatory framework and promoting regional equity, Kenya aims to attract more investments and maximize revenue from its mineral resources.
