Kenya’s Emerging Natural Resources Sector: Getting it Right

Kenya is the latest country to discover oil and gas reserves with potential for commercial production. Interestingly, Kenya has been exploring for oil since the 1950’s but strong interest only took hold around 2000 after the completion of a national study and subdivision of the Lamu Basin into 10 exploration blocks.

In March 2012, Tullow Oil announced that it had discovered oil in Turkana County, with subsequent finds at two other sites in the same county, securing Kenya’s place as a potential oil producer. Most of Turkana’s 855,000 residents depend on nomadic pastoralism and fishing for their livelihoods but the county, one of the poorest and most marginalised in Kenya has untapped tourist potential from Lake Turkana, Lake Turkana National Park and pre-historic stone-age sites.

The impact of Tullow’s find has been a sharp increase in the number of companies seeking to invest in the sector. Indeed, at least twenty-four companies (both majors and juniors) are presently involved in on and offshore exploration. Moreover, ongoing exploration for gas and other minerals including coal, niobium and titanium, has increased the buzz around the extractive sector in the country.

For most Kenyans, oil, gas and minerals finds could not have come at a better time. In 2008, the country launched an ambitious economic blueprint – Vision 2030 – that aims to create a globally competitive and prosperous nation with a high quality of life by the year 2030. Earnings from the exploitation of natural resources would provide much of the capital necessary for the achievement of the plan. However, for this to happen, there is an urgent need to strengthen accountability and transparency in the management of the sector.

In addition, both the government and extractive industries must be sensitive to the potential environmental and social impacts of their activities, including on the human rights of local communities, and ensure operations are managed in a responsible way. This is critical considering that a large portion of ongoing exploration is taking place in the most under-developed and historically marginalized sections of the country and there are huge expectations that these operations will transform the lives of the inhabitants for the better.

Human rights related tensions are already present between companies and the communities within which they operate and are the subject of growing attention by community based organizations as well as civil society. Challenges relating to access to and acquisition of land by companies, compensation for land and crops, access to water, environmental conservation, protection of indigenous cultural heritage, local content (the development of local skills, technology transfer, and use of local manpower and local manufacturing), revenue sharing, and security amongst others must be addressed. Although many of these issues have their own historical legacies, new exploration in some cases is exacerbating old tensions or leading to new disputes.

Fortunately, there are a growing number of tools such as the UN Guiding Principles on Business and Human Rights to help all actors manage such tensions in ways that are consistent with the Kenyan government’s international obligations to protect human rights, reiterated in the country’s 2010 Constitution. Yet despite these commitments and internationally agreed guidance set out in the UN framework, all actors need support and constructive platforms for dialogue and joint action.

The Nairobi Process: A Pact for Responsible Business is a new initiative developed by the Institute for Human Rights and Business (IHRB) in collaboration with the Kenya National Commission on Human Rights (KNCHR) which seeks to provide such support to companies and the Kenyan government to help ensure that a human rights approach is integrated into the activities of this fast growing sector. The initiative also seeks the involvement of local civil society organizations and is committed to building their capacity to apply the UN Guiding Principles on Business and Human Rights and other relevant standards in their awareness-raising activities with host communities and in their advocacy work with government.

One of the priority areas for the Nairobi Process is seeking to ensure that human rights concerns are embedded in proposed legislation and policies relating to natural resource development and the extractive industries as well as in oversight institutions. While it is unfortunate that needed laws are only being discussed long after exploration has began, hopefully, new and more protective laws will be in place before production starts. In this context, the issue of security is emerging as one urgent concern: attacks on oil installations and company workers have been reported at some sites and these are often symptomatic of wider community grievances. Hence, to address insecurity effectively, all the other issues will have to be tackled as well.

As one of its initial actions aimed at addressing security related concerns, the Nairobi Process recently organized three separate forums with companies, governments and civil society organizations in Kenya. In addition to the importance of the UN Guiding Principles, participants at these events discussed the relevance of the Voluntary Principles on Security and Human Rights. Launched in 2000 by governments, companies and Non-Governmental Organizations, the Voluntary Principles are standards designed to help companies plan and maintain security and safety of their operations within a framework that encourages the respect of human rights. Kenya is not amongst the signatory governments to the Voluntary Principles.

Though the discussions in Nairobi were not specifically aimed at advocating for Kenya to join the Voluntary Principles initiative, they did highlight the value of the principles in strengthening laws currently under review and in reforming public security processes around new oil and gas installations. Addressing security challenges from a human rights perspective is a subject that needs to be nurtured to the point where it is accepted and implemented by the relevant government authorities. At the same time, extractive industry companies operating in Kenya who are using private security guards as well as public security need to understand and call for full implementation of the Voluntary Principles within their own operations.

A second and complementary approach also discussed as part of the recent forums was the need for a comprehensive risk assessment framework. Such a framework would evaluate the risks present in the company’s operating environment as it relates to the assets of the company, its personnel and most importantly the local communities and their assets including the environment. A process of this kind calls for the involvement of affected communities, civil society, companies and the government. An example of such an approach is seen in Colombia where comprehensive risk assessments are being used as a tool to manage security risks in the oil industry.

The Nairobi Process will draw on these and other international best practices that can contribute to the protection of human rights as this sector develops. For it is only by working together that all stakeholders will realize the full potential of Kenya’s resources.

Further Resources

• National Oil's Upstream Activities
• The Voluntary Principles: Colombia Case Study
• Petroleum to the People - Africa's Coming Resource Curse and How to Avoid it
• Kenya Sets Framework to Manage New Petroleum Wealth
• Cortec invests $90m to mine niobium in Kenya
• Kenya invites bids for coal exploration blocks