Kenya’s oil curse?

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Oil exploration in Turkana, Kenya. Credit: Andrej Matisak

Oil exploration in Turkana, Kenya. Credit: Andrej Matisak

Questions:

1. With oil deposits in Kenya’s north-region Turkana it seems we are witnessing an inter-communal conflicts. How would say Nairobi should address it?

2. In general, do you see the possibility that Kenya may be heading to so/called “oil curse” and how to avoid it?

Answers:

David Anderson, Director of Graduate Studies in History, Professor of African History, University of Warwick

1. Kenya’s oil has been discovered in the northern borderlands, where the state already confronts a number of difficulties.  These are very poor regions, even by African standards, and the Turkana region where the oil installation is now being constructed is amongst Kenya’s poorest locations.  Not surprisingly, local people are keen that benefits from the oil should come to them, but they have little trust in the Kenyan government to deliver these benefits.  The government has a larger development plan linked to the oil exploitation, and this has already caused inflated land values in the affected areas and generated local conflicts over resource allocations.  If the Kenyan government is to avoid local conflicts, then the situation will need to be handled with the greatest of care.

2. Like other African countries that have recently discovered oil, Uganda and Ghana being the most prominent examples,  Kenya is faced with choices about how to administer the economic bonus this will bring.  Does Kenya want to be the new Norway, or the new Nigeria?  Norway managed its oil bonus by establishing a sovereign wealth fund that transformed the country from one of the poorest in Europe to one of the wealthiest.  Nigeria, in contrast, squandered its oil bonus in political buy-offs the fuelled corruption and distorted politics in a negative way.  For Norway, oil was a blessing: for Nigeria, oil was a curse.  Which will Kenya follow?  At present, all the indications are that Kenya is most likely to follow the Nigerian experience. To avoid this some very substantial political and regulatory steps need to be taken.  There is no evidence that the Kenya government currently has the capacity to do this.

Daniel BranchAssociate Professor, African History, History Department, University of Warwick

1. The only way that any government in Nairobi could address ethnic conflict is to abandon ethnic politics and look seriously at how to redistribute wealth and opportunity around the country to all Kenyans regardless of ethnic origin.  However, Kenyatta and Ruto are not going to do this as their election strategy in 2013 was based on them mobilising their respective ethnic communities, the Kikuyu (Kenyatta) and Kalenjin (Ruto).

2. The biggest challenge facing Kenya the moment is not the oil curse but rather the dashed expectations of communities that expected wealth to follow the oil discoveries.  There were always unrealistic expectations of the oil discovery.  But the drop in the global oil price has made the Kenyan fields less economically viable for the companies.  However, President Kenyatta came to power promising 10%+ annual GDP growth in the hope that oil and gas finds would trigger rapid economic development.  That was always highly unrealistic but as the realisation dawns on Kenyans that the promised riches will not materialise then there will be significant discontent.  And this government has shown it is not particularly tolerant of dissent.

Scott Morgan, President Red Eagle Enterprises

1. First we should remember that these conflicts have been around before the discovery of oil. Regarding addressing the issue holding people accountable for their actions and ensuring that they are part of the process of the distribution of revenue and even seeing what their needs are are a positive step forward. In the past Nairobi has reacted with some heavy handed tactics

2. Doing what Ghana did back in 2012 can help. They set aside some of the revenue gained into two accounts. One to allow investments into other sectors of the economy such as agriculture and transportation. Secondly they set up a rainy day fund to cover any future shortfalls in revenue. These could be steps to be used as foundations for future growth.

Makau MutuaSUNY Distinguished Professor, SUNY Buffalo Law School, The State University of New York

The key to a secure and prosperous exploitation of newly found mineral wealth and other resources is transparent contracting in which the communities affected fully participate and are assured of benefiting first and foremost from such wealth.  The environment in which they live must be safeguarded.  Nairobi needs to stop opaque and corrupt contracting with dubious foreign entities.  That’s the only to avoid local conflicts over resources.

Gus SelassiePrincipal Analyst, IHS

As you may already know, the conflict in Turkana is a longstanding one, and which was traditionally about land/water rights. The discovery of oil in the region is only likely to exacerbate this tension. The government taking steps to clear the region from illegal arms is a step in the right direction in deescalating the tension, but the process is difficult and fraught with danger.

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