Kenya knows its debt, not assets

Kimbo was the brand name for a popular shortening fat in Kenya and the region. It was the acronym for the Kenya Industrial Management Board, which administered the colonial laboratory established to promote industrial development.

The Structural Adjustment Programmes of the 1990s abbreviated that path to industrialisation through import substitution.

Vision 2030 attempted to pick up the pieces and return Kenya to the business of long-term national transformation: a more competitive economy, better infrastructure, greater industrialisation and a higher quality of life. In many respects, it circled back to the question that import substitution had posed in a different way: how does Kenya turn its resources, people and productive capacity into national wealth?

Vision 2060 seeks to extend that unfinished story.

The roadmap to the new vision is right to put human capital at its centre. No country develops without educated, healthy, skilled and productive people. But people are only one side of a national balance sheet.

Fred Matiang’i recently claimed that geological mapping has placed Kenya’s mineral potential at Sh17 trillion. That number deserves interrogation.

Kenya’s nationwide airborne geophysical survey identified 970 geophysical anomalies. The government’s own draft Minerals, Mining and Beneficiation Policy says these require “ground-truthing and three-dimensional modeling” before their size, orientation and resource potential can be established.

National wealth

The uncertainty over their value should not obscure the fact that Kenya is discovering a natural-resource endowment never properly incorporated into its conception of national wealth.

There are gold, copper, graphite, nickel, rare earths and other critical minerals, alongside titanium, niobium and industrial minerals. And then there is oil.

Kenya’s petroleum story goes beyond Turkana. Four sedimentary basins — Lamu, Mandera, Anza and the Tertiary Rift — cover 485,000 square kilometres. Yet only 94 exploration wells have been drilled across them, producing 13 discoveries.

Not every promising rock should be drilled or every available petroleum block licensed. But there is need to know more about what lies beneath the soil and waters before deciding how to deploy it.

The natural resource balance sheet does not end underground. The climate crisis is giving economic value to things that development economics once treated largely as environmental concerns.

Kenya’s forests, rangelands, agricultural soils and wetlands can store carbon and generate emissions reductions and removals with monetary value in emerging carbon markets. Kenya now has a regulatory framework requiring environmental integrity, independent verification and community benefit-sharing.

And carbon raises the same questions as minerals and petroleum: Who captures the value?

Who owns the carbon rights? Who negotiates their sale? Who verifies the credits? Who receives the proceeds?

Kenya has become remarkably good at measuring liabilities; but not its assets. By March this year, public and publicly guaranteed debt stood at Sh12.83 trillion. The Treasury can account for this liability with remarkable precision. But what is Kenya’s natural balance sheet worth? The answer appears in fragments.

Vision 2060 experts identify corruption as a major obstacle to Kenya’s development. That is especially important when talking about natural wealth.

Natural resources do not merely create wealth; they create opportunities for that wealth to be captured. A mineral concession, petroleum licence, infrastructure project or carbon market can create opportunities for rent-seeking and value capture.

It is not enough for Kenya to know what it owns. Citizens must also be sure that the institutions that know what Kenya owns can be trusted to protect it.

A country that does not know the value of a resource cannot effectively negotiate its exploitation. Worse, a country whose institutions are compromised by corruption can lose value even when it knows exactly what it owns. That is how natural wealth becomes a curse.

Natural resources

The fragmented view of natural resources as separate sectors — mining, petroleum, agriculture, forestry, energy and environment — hides their value as components of national wealth. Seeing natural resources only as sources of current revenue can lead to current generations consuming an inheritance rather than converting it into permanent wealth.

The paradox at the heart of Kenya’s development story is that Treasury knows, almost to the shilling, what Kenya owes. Citizens know far less about the value of what Kenya owns.

Vision 2060 can break with the planning exercises that preceded it by beginning with a natural capital balance sheet that records what Kenya owns, who has authority to license and regulate it, who collects and accounts for the proceeds, and how much value ultimately reaches Kenyans. Transparency, independent oversight and public disclosure are part of the value of the assets themselves.

The new vision should connect natural capital to human capital. Vision 2030 asked how Kenya would transform itself. Vision 2060 should ask what Kenya will transform — and what it will transform it into.

But it must also ask a harder question of who will control the assets with which Kenya intends to build that future.

Human capital can turn natural capital into productive wealth. Good institutions turn wealth into national assets, but corruption can convert it into private fortunes.

Natural resources are ultimately about intergenerational wealth. Before Kenya writes another shopping list of aspirations, it should establish not only what it owns, but how it will protect it.

Kimbo belonged to an era in which Kenya wanted to make things rather than import them. Structural adjustment interrupted that ambition. Vision 2030 sought to restore the project of transformation.

Perhaps before Kenya decides where it wants to be in 2060, it should establish what it is taking there.

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The writer is a board member of the Kenya Human Rights Commission and writes in his individual capacity. @kwamchetsi; [email protected]

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