Treasure all Kenyans, a pile of treasure may lie under their feet

Sunday March 20 2016

Drilling machines at Cheptuket in Elgeyo-Marakwet County on March 17, 2016, where oil was discovered by Tullow Oil Company. PHOTO | JARED NYATAYA | NATION MEDIA GROUP

Drilling machines at Cheptuket in Elgeyo-Marakwet County on March 17, 2016, where oil was discovered by Tullow Oil Company. PHOTO | JARED NYATAYA | NATION MEDIA GROUP 

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Perhaps the biggest story of the week was the announcement by Tullow Oil that it has made what could be a significant oil find in the Kerio Valley.

The British company (whose bet on striking oil in Kenya and Uganda is one of the great business stories of our time – although that’s a tale for another day) said the Kerio Valley’s petroleum system could prove to be the biggest in the country outside the Turkana area.

That statement means a few things for Kenya. The first is that in the next two decades or less, the structure of the economy might undergo the biggest transformation since the colonialists arrived 100 years ago.

The old “green” economy, heavily reliant on tea and coffee for export sourced from the “highly productive” areas, will gradually be replaced by new sources of income.

The most prominent of these will be the services sector across areas such as finance and IT and, of course, commodities such as oil.

If it is confirmed that the South Lokichar basin in Turkana alone has 600 million barrels of recoverable oil, for example, just calculate how much that means to the economy even at the current depressed oil price of $30 a barrel.

In a sense, Kenya seems to have shaken off its old “Israel problem” of being a land with few discovered minerals in a region surrounded by countries with numerous riches under the soil. But new troubles will be around the corner. Experts usually warn that economies might suffer the Dutch Disease – where minerals supply such huge amounts of money to the national budget that other sectors of the economy are totally neglected.

Kenya is not likely to have that particular problem (unless the currency is mismanaged meaning sectors such as tourism suffer if the value of the shilling rises too much) because the country’s economy is already one of the most diversified on the continent.

Kenya will be exposed to a different problem – the crisis of inequality. It is a delicate irony that all these major mineral discoveries – oil in Turkana and possibly in the old North Eastern province, coal in Kitui and Lamu – are being found in the “arid areas” which successive governments had dismissed as “unproductive” and therefore banished to decades of underdevelopment.

This is an issue policymakers must pay attention to. The lesson of history across Africa is that when minerals are found in areas which feel ill-treated by the national government or where elites simply don’t want to share the wealth in their region with the rest, conflict is never far away.

Let’s not forget that modern Congo’s endless crises were sharpened in 1965 when the Katanga region, which boasts 34 per cent of cobalt reserves in the world, attempted to secede.

Cabinda, the wealthiest region of Angola in terms of mineral resources, also tried to break away and the Delta region in Nigeria, where a large proportion of the country’s oil is to be found, has suffered prolonged spells of turmoil.

Considering all this, an enlightened national leadership which is able to look into the future and not just focus on the next election would work hard to foster cohesion and build national unity to avoid these potential pitfalls.

I’ve never understood why communities focus so much on whether members of their ethnic groups are tapped for key appointments but the fact is considering this is such an emotive issue, a wise leader would seek to share the “national cake” more equitably and make everyone feel they have a stake in the country.
Devolution, despite all its problems, is a great model because it strikes a formula to distribute national wealth.

But most of the cake is still with the national government and, at least from the standpoint of perception, the Jubilee administration has singularly failed to show that it understands the importance of national cohesion.

Right from the cabinet to parastatals, the top posts are held by members of the two main communities which form the ruling coalition including, ironically, the board of the National Oil Corporation.

This is obviously unwise. What would happen if the ongoing exploration in the Ahero basin finds there are viable deposits of oil in the heart of Luoland, a group which has seemed to be completely elbowed out of the table at the national level?

At the very least, even if there was no conflict, there would be a very messy debate.

National leaders need to display a greater strategic vision rather than simply taking a tactical approach designed to build electoral alliances.

That would be better for Kenya than fighting phantoms said to be against the government, of which the media seems to have been singled out for a ruthless pummelling.