By Dr. Kariuki Muigua, PhD (Leading Environmental Law Scholar, Policy Advisor, Natural Resources Lawyer and Dispute Resolution Expert from Kenya), Winner of Kenya’s ADR Practitioner of the Year 2021, ADR Publisher of the Year 2021 and CIArb (Kenya) Lifetime Achievement Award 2021*
Equitable benefit sharing can be defined as the access to benefits that accrue from natural resources by stakeholders including indigenous communities. The international recognition of the right to benefit from natural resources wealth may be predicated upon such recognized rights of communities as the right to self-determination, right to development and the right of peoples to freely dispose of their wealth and natural resources. The principle of equitable benefit sharing is acknowledged in several international environmental and natural resources law instruments. As a potentially major importer of oil in future, the discovery of oil is deemed as a major boost to the Kenyan economy. The economic value of oil is expected to be high and central to the development of the local community, though it has its benefits and challenges in equal measure.
Indeed, it has been reported that the discovery of oil has facilitated infrastructural developments such as schools, health amenities and making the area easily accessible. Within two years of discovery, buildings were erected, human population was recorded at 500% growth in several towns within Turkana County. This is an indication of the high hopes that have been pegged on the potential benefits that may accrue from this venture. Benefits may take either monetary or non-monetary forms and stakeholders should exploit both forms. Capacity building within the community ensures that communities become less dependent on the immediate benefits accruing from commercial exploitation of the resources and instead have enduring sources of livelihoods. Research may go a long way in helping communities realize the other forms of investments or economic activities that may be viable within their localities. Thus, communities should not only seek to receive the monetary benefits but should also take advantage by acquiring the relevant skills and investing in businesses or venture that will help them in the long term even after the oil reserves are depleted.
The Constitution outlines the principles of land policy and provides that land in Kenya must be held, used and managed in a manner that is equitable, efficient, productive and sustainable, and in accordance with the laid down constitutional principles. Land in Kenya is classified as public, community or private. Noteworthy is the provision that regardless of their location, the Constitution classifies all minerals and mineral oils as defined by law and all rivers, lakes and other water bodies as defined by an Act of Parliament as forming part of public land. The Natural Resources (Classes of Transactions Subject to Ratification) Act, 2016 is meant to give effect to Article 71 of the Constitution of Kenya, 2010 and for connected purposes.
Notably, the Act outlines the relevant considerations in deciding whether or not to ratify an agreement. The proposed legislation Natural Resources (Benefit Sharing Bill), 2018 seeks to establish a system of benefit sharing in resource exploitation between resource exploiters, the national government, county governments and local communities, to establish the natural resources benefit sharing authority and for connected purposes. The Act applies with respect to petroleum and natural gas, among other natural resources. The Act provides for guiding principles to include transparency and inclusivity, revenue maximization and adequacy, efficiency and equity and accountability. The legislation proposes setting up a Benefit Sharing Authority which will be mandated to coordinate the preparation of benefit sharing agreements between local communities and affected organizations, and review and where appropriate determine the loyalties payable to an affected organization engaged in natural resource exploitation, among other related functions.
The Environmental Management and Co-ordination (Amendment) Act, 2015 amends section 48 of EMCA by inserting subsection (3) to the effect that where a forested area is declared to be a protected area under section 54(1), the Cabinet Secretary may cause to be ascertained, any individual, community or government interests in the land and forests and shall provide incentives to promote community conservation. This is an important clause that can promote forests conservation through the use of incentives. The incentives can be in the form of benefits that accrue to the community from the forests resources. The Mining Act, 2016 provides for accruing benefits in the form of financial and other benefaction to which communities in mining areas are entitled to receive from the proceeds of mining and related activities.
The Petroleum Act, 2019 provides that the relationship between the Government and an exploration and production company is governed by a Production Sharing Contract (PSC). The PSC stipulates that the exploration and production company gets a share of the oil and gas produced and its share is in the form of oil barrels. Notably, the Act introduces the concept of “local content” which means the added value brought to the Kenyan economy from petroleum related activities through systematic development of national capacity and capabilities and investment in developing and procuring locally available work force, services and supplies, for the sharing of accruing benefits. The local content plan should address- employment and training; research and development; technology transfer; industrial attachment and apprenticeship; legal services; financial services; insurance services; and succession plans for positions not held by Kenyans. The requirement on local content can go a long way in enhancing benefit sharing mechanism in the extractive industry in Kenya, an aspect that was missing or inadequate in the Kenyan framework.
The National Sovereign Wealth Fund Bill, 2019 is a proposed legislation that seeks to establish the Kenya Sovereign Wealth Fund, to provide institutional arrangements for effective administration and efficient management of minerals and petroleum revenues, and for connected purposes and incidentals thereto. The purpose of the Fund shall be to — insulate expenditure under the budget estimates of the national government from fluctuations in resource revenues; provide finance for infrastructure development priorities to foster strong and inclusive growth and development; and build a savings base for future generations when minerals and petroleum resources are exhausted. This fund will be important in promoting intergenerational and intragenerational equity in natural resource benefits sharing.
The Community Land Act, 2016 is meant to give effect to Article 63 (5) of the Constitution; to provide for the recognition, protection and registration of community land rights; management and administration of community land; to provide for the role of county governments in relation to unregistered community land and for connected purposes. The Act provides that every member of the community has the right to equal benefit from community land, where equality includes full and equal enjoyment of rights of use and access. This is a form of promoting benefit sharing as far as community land is concerned. This provision, if fully implemented, is likely to impact positively on the community in ways that ensure that the community becomes self-sustaining as far as livelihood sustenance is concerned through both monetary and non-monetary forms of benefits.
*This article is an extract from the Article: Securing Our Destiny through Effective Management, (2020) Journal of Conflict Management and Sustainable Development Volume 4(3), p. 1. by Dr. Kariuki Muigua, PhD, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Publisher of the Year 2021 and ADR Lifetime Achievement Award 2021 (CIArb Kenya). Dr. Kariuki Muigua is a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. Dr. Kariuki Muigua is a Senior Lecturer of Environmental Law and Dispute resolution at the University of Nairobi School of Law and The Center for Advanced Studies in Environmental Law and Policy (CASELAP). He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Dr. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Africa Trustee of the Chartered Institute of Arbitrators and the Managing Partner of Kariuki Muigua & Co. Advocates. Dr. Muigua is recognized among the top 5 leading lawyers and dispute resolution experts in Kenya by the Chambers Global Guide 2022.
References
Community Land Act, No. 27 of 2016, Laws of Kenya.
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Environment (Management and Coordination) Act, No.8 of 1999, Laws of Kenya.
Jonge, B., What is Fair and Equitable Benefit Sharing? Journal on agricultural and environmental ethics, vol. 24, issue 2, 2011.
Kornet, J., ‘Oil in the cradle of mankind – A glimpse of Africa’s future,’ available at http://www.frontiermarketscompendium.com/index.php/newscommentary/entry/oil-in-the-cradle-of-mankind-a-glimpse-of-africa-s-future [Accessed on 21/01/2020].
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Muigua, K., et al, Natural Resources and Environmental Justice in Kenya, (Glenwood Publishers Limited, August, 2015), pp. 248-251.
National Sovereign Wealth Fund Bill, 2019.
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Natural Resources (Benefit Sharing) Bill, 2018, 23rd October, 2018 (Government Printer, Nairobi, 2018), Kenya Gazette Supplement No.130 (Senate Bills No.31).
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UN General Assembly, International Covenant on Civil and Political Rights, 16 December 1966, United Nations, Treaty Series, vol. 999, p. 171, Article 1.
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