23 April 2016

Kenya's Cabinet Gives Nod to New Mining Policy

Kenya's Cabinet has approved the Mining and Minerals Policy, aimed at encouraging investments in the extractives industry.

The policy, approved on April 1, provides guidance on the conduct of mining and development activities in the country. It touches on environmental issues, local value addition, post-mine closure activities, mainstream, artisanal and small-scale mining.

"This policy provides a framework for sustainable mineral resource development. It brings predictability and certainty and ushers in a new dawn to attract investment in the mining sector," said Mining Cabinet Secretary Dan Kazungu.

Kenya's mining sector contributes 0.8 per cent to GDP, but the government's target is to boost this contribution to 10 per cent through value addition instead of exporting raw minerals.

"The policy paves the way for the preparation of a new Bill that will repeal the Mining Act 306, Diamond Protection Act Cap 310 and Trading in Unwrought Precious Metal Cap 309, and provide a more progressive comprehensive Mining Act," said Mr Kazungu.

The policy will be ratified by Parliament before the president assents to it. The Mining Act of 1940 currently guides the sector, but it lacks an overarching policy.

Mr Kazungu said the policy will address key gaps in the Mining Act of 1940, strengthen the institutional framework and align the sector to Constitutional provisions, latest global value addition trends and the use of technology, in order to spur investor interest.

"The policy will promote the use of appropriate technology including geospatial technology and airborne geophysical surveying in order to enhance information on the country's mineral potential and thereby enhance investment in the mining sector," said Mr Kazungu.

The government has come up with a model for marketing Kenya's mining potential. It involves implementing a 20-year mining strategy and a comprehensive mining framework.

Other strategies are the enactment of the Mining Bill of 2014, which is awaiting the final approval for legislation by the Senate and National Assembly before the president assents to it; implementation of mining regulations, establishment of a stable fiscal regime and an airborne national geophysical survey.

Research and educational organisation Fraser Institute of Canada said Kenya's efforts to transform the mining sector into a key economic pillar are being hampered by policies that make the country unattractive to foreign investors.

Fraser's Annual Survey of Mining Companies for 2015 released recently ranked Kenya as the second least attractive destination for investments in Africa. Guinea is ranked the least attractive and Zimbabwe is third least attractive.

"Some general trends seen among those countries rated at the bottom of the survey on policy are big concerns about security, political stability and trade barriers," the report notes.

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