The extractive industry in kenya



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KNCHR © 2012|


KENYA NATIONAL COMMISSION ON HUMAN RIGHTS

CIVIL SOCIETY ORGANIZATIONS CONVENING ON BUSINESS AND HUMAN RIGHTS:

THE EXTRACTIVE INDUSTRY IN KENYA



19TH – 20TH JUNE, 2012

NAIVASHA


REPORT

Table of Contents


Table of Contents 1

ACRONYMS 2



INTRODUCTION 3





ACRONYMS




ACHPR

African Charter on Humans and Peoples Rights

AIMES

African Initiative on Mining, Environment and Societies

AMDC

Africa Mining and Development Center

CBO

Community-Based Organization

CNOOC

China National Offshore Oil Corporation

CSO

Civil Society Organization

DRC

Democratic Republic of Congo

GCNK

Global Compact Network Kenya

ICCPR

International Covenant on Civil and Political Rights

ICESCR

International Covenant on Economic Social and Cultural Rights

ITUC

International Trade Union Confederation

KAM

Kenya Association of Manufacturers

KENRA

Kenya National Resource Alliance

KEPSA

Kenya Private Sector Alliance

LAPSSET

Lamu Port South Sudan Ethiopia Transport

NHRI

National Human Rights Institution

UN

United Nations

UNECA

United Nations Economic Commission for Africa


INTRODUCTION


The impact of extractive industries in Africa and indeed in most developing countries has been a cause of much controversy and debate in recent decades. While promising economic growth and social development from the exploitation of natural resources, most of extractive industries have instead contributed to the devastation of the countries governance systems and economic structures, leading to increases in poverty in the areas in which the industries operate, human rights abuse and, sometimes, irreversible environmental degradation

Multi-national corporations at the helm of most extractive enterprises, in collusion with state actors, have engages in unconscientious expropriation of natural resources in most third world countries. The scrounging extractive policies adopted by most of these corporations have had enduring adverse effects on the economic, environmental and social well being of most countries in which they have been implemented. Consequently, the promises of economic and social transformation from the extraction and exploitation of natural resources in most developing nations have rarely come to fruition and have instead caused much destruction to the social, economic and political fabric of the countries in which the exploitative practices have been permitted.

The recent discovery of oil deposits in Turkana by multi-national corporations, has brought to the fore the debate over the exploitative and often destructive potential of extractive industries to the economic and social well being of the host country. Identifying the need to confront and mitigate the potential harm that extractive practices can have on persons, communities and the country in general, the Kenya National Commission on Human Rights (KNCHR), undertook to consult with the relevant duty bearers in State office as well as Civil Society Organizations (CSO’s), both regionally and domestically, in a bid to obtain an accurate understanding of the threats posed by the extraction of oil and other geological resources to the host communities living in the respective areas and to the country’s political and economic well being.

KNCHR began this consultative process by holding a two day convention in Naivasha with National CSO’s, Community-Based Organizations (CBO’s) as well as representatives of regional human rights institutions to analyze the challenges, threats and opportunities presented by the extractive industry in Kenya as well as the legal, policy and advocacy mechanism available for engagement.

The main objectives of the convention were to;


  • Familiarize participant with local and international legal and policy advances with regards to the human rights aspects of business.

  • Discuss the ongoing developments in the exploration and extraction of oil and other mineral resources in Kenya and their impact on the respective host communities.

  • Share experiences with human rights institutions from different countries across Africa on the economic and social impact of the extractive industries other jurisdictions and the challenges encountered in attempts to remedy these outcomes.

  • Identify means by which adverse economic and human rights effects of extractive enterprises in Kenya can be curtailed, remedies and avoided in the future.

  • Create a plan of action through which to follow-up on the reengagements agreed to at the convention.



  1. Opening Remarks and Presentations

  1. International Legal Framework on Business and Human Rights

The Conference began with presentations and discussion around the United Nations (UN) ‘Protect, respect and Remedy Framework and the Guiding Principles on Human Rights. The presentation opened with an analysis of the domestic legal and policy gaps that facilitate the human rights challenges prevalent in extractive enterprises in developing countries. The discussion identified human rights as an indispensable aspect of sustainable development and identified the respective responsibilities of States in promoting and protecting human rights

as well as the duty of corporations to respect human rights.

This was followed by analysis of the domestic legal framework establishing the respective responsibilities with a focus on the provisions of the Constitution and international conventions such as the UN Global Compact of 2000 and the resultant UN Guiding Principles on Business and Human Rights of 2011 including measures facilitating access to judicial, administrative and non-judicial remedy mechanisms. The presentation underscored the duties and responsibilities of governments, corporations and civil society organizations in ensuring that natural resources are expropriated and applied to ensure prosperity for all.

Participants were encouraged to not only familiarize themselves with the local and international legal mechanisms but to participate in the conceptualization of human rights approaches in the development and operation of extractive industry in Kenya through environmental social and human rights impact assessment and the development of proper legal and policy frameworks



  1. Development Based Evictions in Kenya; History and legal framework

Having illustrated the history of forced evictions and displacement caused by government projects and private commercial developments, participants were reminded of the adverse impact that the misapplication of the State’s power of eminent domain has had on communities living in areas identified for extractive engagements. The presentation highlighted the need for the application of international standards with regards to investment or development related evictions.

Participants were introduced to international legal instruments that lay out the legal guarantees against arbitrary evictions as well as the standards and best-practice with regards to development/investment based evictions including the International Covenant on Economic, Social and Cultural Rights (ICESCR), the International Covenant on Civil and Political Rights (ICCPR), the Basic Guidelines on Development-Based Evictions and Displacement developed by the UN Special Rapporteur in 2006 and the African Charter on Human and Peoples’ Rights (ACHPR) – which emphasize the need to protect the individual’s right to property and adequate housing from arbitrary forced evictions.

The presentation also identified the variety of domestic laws and policies that provide certain protections against forced evictions and apply international human rights standards to implementation of development/investment related evictions. However, the laws and policies were illustrated to be spatial and needed harmonization. A policy on internal displacement had been developed though various stakeholder consultations to design a harmonized legal regime to deal with the diverse causes and aspects of internal displacement, but had yet to be implemented.

The session concluded with participants being urged to re-establish cooperative relationships with state agencies to restore the avenues of communication, seeing that state agencies had become accustomed to operating without having to engage in consultation – a situation partly exasperated by their concern that CSO’s and National Human Rights Institutions (NHRI’s) always operated with the cynical motive to publicly criticize all state actions.



  1. IMPACT OF LAND RELATED INVESTMENTS BY MULTI-NATIONAL CORPORATIONS IN KENYA

This session involved panel discussions on the impact of land-related investment activities of multinational corporations upon the various host communities in Kenya. The panelist, who represented CBO’s from Turkana, Kitui, Lamu and Isiolo Counties, took the participants through their respective experiences with the extractive and investment activities of multi-national corporations in their respective counties and the adverse social, economic and human rights impacts these have had on the host communities.

  1. Oil Exploration in Turkana County

The session began with the one of the panelists reading of an article that described the impact of American and European multi-national oil companies on the economic and political situation of the civil war that ravaged Angola. The article articulated how the oil corporations, in collusion with a corrupt government, expropriated vast quantities of oil from the reserves in Angola while leaving the country severely impoverished. In spite the façade of corporate social responsibility through the establishment of schools and health centers, these projects were never sustained by either the government or the oil corporations that continued to pass the buck on their responsibilities all the while avoiding accountability on the question of revenues earned and shared.

The panelists from Turkana drew parallels between the situation in Angola, Nigeria, Sudan and the Democratic Republic of Congo (DRC) to that in Kenya. They related the similarities in the complete absence of transparency in the conceptualization and implementation of the oil exploration which had been done exclusive of consultation with or concern for the local communities. This lack of transparency was further elucidated by claims that the land upon which the oil deposits were discovered that the government has demarcated and termed “Ngamia” (camel) projects was located on community land held in trust for the mostly pastoral people of Turkana by the area council, had secretly been sold off to local individuals, some suspected to be prominent politician within the government.

The participants were cautioned that the continued lack of meaningful consultation with the local communities coupled with turbulent and sometimes violent record of the communities living in and around the area over the scarce resources as well as the history of marginalization and the previous development activities by both humanitarian and government agencies, could serve to severely destabilize the area.

The panelists related the communities concern that the oil exploration and possible extraction, though promising significant improvement to the economy of the area, would realize no substantial benefit to the local communities

s who, having been excluded from the policy and decision making process, stand to lose their livelihoods from the clandestine transfer of ownership over resources such as water and pastoral land as well as their culture as a result of migration of foreign communities to take up jobs and opportunities consequent to the exploration and extraction.


  1. Coal mining in Kitui County

The panelist, representing CBO’s working around issues of economic empowerment in Kitui County, took the participants through a brief history of coal mining, the various classifications of coal as well as their respective uses, the global scale of production and uses of coal, and a short history on the prospecting for coal in Kenya.

The presentation articulated the absence of cogent policy and law on coal mining in Kenya despite the discovery of vast coal deposits in Kitui County. Though a Draft Mining Bill has been put forward, it was designed by the Ministry of Environment without recourse to the recommendations of stakeholders. Consequently, the draft bill fails to address the peculiar challenges relating to the regulation of coal mining and fails to adequately facilitate for County as well as the community with regards to revenue sharing.

Lack of transparency also dogs the prospecting for coal in Kitui with community land being sold off to politicians and individuals wielding political and monetary influence to be then sold to prospectors at a premium. All the while, unjustifiably generous concessions have been made to the extracting companies. The panelist commented on the difficulties they faced trying to raise awareness of these and other challenges faced by the local community through the media, and was particularly concerned by the lack of awareness of the risks that the local communities may be exposed to through the extraction process such as the health risks experienced by coal workers and coal mining communities in the past in counties such as Australia and the UK.

There has also been limited consultation and information sharing regarding the prospect of coal mining with communities in the area that stand to be affected by the mining processes. The panelist reported how public awareness campaigns by CBO’s had faced significant resistance from the Provincial Administration.

The sentiments were echoed by participants regarding the extraction of various resources in the Coast, including sand, gemstones, limestone, salt, iron etc. He alluded to the exploitative impact of foreign investment which the government seems to prefer over local investment and echoed the need for reform of government policies to ensure full consultation, participation in the exploitation of the natural resources and the earnings therefrom. As with the previous panelists it the participants remarked to the lack of meaningful consultations with the respective communities as well as a weak legal framework that seemed to favour the exploitative operations of the extracting corporations over the interests of the affected communities.


  1. Impact of the Lamu Port South Sudan Ethiopia Transport (LAPSSET) project on communities in Lamu and Isiolo

Similar to the presentations regarding the extractive projects in Turkana, Kitui areas, in and around the coast province, parallels were drawn to the circumstances surrounding the implementation of the LAPSSET project. Participants were informed as to how the LAPSSET project had been instituted and was in the process of execution without dialogue and consultation with the affected communities.

The project had drawn investors from a variety of governments and institutions and, as with the oil exploration in Turkana, there had been little to no engagement with the local communities either to provide information regarding the project or to include their views in the conceptualization of the project. This has resulted in intense disgruntlement with the development project as local communities are displaced to pave way for the myriad of construction schemes within the project.

A study of the project by one of the panelists had exposed the failure to conduct adequate environmental impact assessments as the project threatened to significantly degrade the vibrant aquatic ecosystem in the natural Lamu sea port. Similarly, no human rights impact assessment seems to have been conducted in spite of the consideration that the project threatens to destroy the fishing industry of the indigenous communities most of whom rely on fishing as their sole means of sustenance, as well as the tourist industry in the area as the unique cultural and historical sites come under threat of destruction through the project.

Similar sentiments were expressed by one of the panelists from Isiolo regarding the same project. The panelist spoke of the concern of the members of the community over the proposed railway line and terminus as well as the variety of ancillary developments that are earmarked for construction within the county. Participants were reminded that Isiolo has been historically subject to marginalization and the exploitation of its resources such as water has and continues to occur without substantial benefit to the indigenous communities.

The panelist was particularly concerned over the absence of consultation with regard to the design of these plans especially considering that the use land resources is a particularly delicate and volatile issue in the area. Consequently, the community sees the proposed developments as an attempted land grab and consequently do not look favourably upon the said developments.

These views were echoed by one of the participants who asserted, among other things, that the land in Isiolo, being communal land is held in trust by the County Council of Isiolo. The leaders of the council are weak and may be induced to sign away land belonging to the community in favour of the developers. Considering the implementation of the project to be inevitable, the participant was concerned that inadequate mechanisms had been set in place to ensure that the project would benefit the communities affected.

The panelists alluded to the absence of adequate laws and legal mechanisms to protect human rights interests of the communities from aggressively implemented government-backed development and investment initiatives.


  1. REGIONAL AND LOCAL INITIATIVES ON BUSINESS AND HUMAN RIGHTS

This session focused on the regional and domestic initiatives established to address the impact of exorbitant extractive practices on local communities and uphold standards that ensure the respect for human rights within business processes.

  1. The African Initiative on Mining, Environment and Societies (AIMES)

Participants were introduced to the African Initiative on Mining Environment and Societies (AIMES), a regional initiative that works primarily to look into the extraction of resources in Africa and address the impact of these practices on local communities with regards to destruction of livelihoods, ecological degradation, violation of human rights and other forms of economic and social injustices.

Participants were informed of the various engagements that the initiative had participated in including the presentation of briefs and papers in the 2007 United Nations Economic Commission for Africa (UNECA), which resulted in the development of the two policy documents - Africa Mining Vision and Action Plan in 2009 and 2011 respectively – which offer a policy framework for realizing the benefits of mineral extraction to mining corporations and local communities. The policy framework and decisions emanating therefrom are to be implemented by the Africa Mining and Development Center (AMDC) whose business plan was to undergo discussions in a joint meeting organized between the International Trade Union Confederation (ITUC-Africa) and the Third World Network – Africa (TWN-Af) in between the 26th and 29th June 2012 in Accra Ghana



  1. Code of Business Ethics Initiative

The participants were also introduced to a domestic initiative spearheaded by the Kenya Private Sector Alliance (KEPSA), the Global Compact Network Kenya (GCNK), as well as the Kenya Association of Manufacturers (KAM), by which local companies accede to operate to a prescribed code of ethics in their operations. Corporations that volunteer to sign up to the code of ethics agreed to do so publicly with advertisements concerning their accession being placed in the local dailies.

The corporations signing up agree to bind themselves to observe certain standards concerning anti-corruption, human rights, labour rights and environmental protection, most of which are drawn from the UN Global Compact Initiative. Under the initiative, companies undertook to report on the level to which they had implemented the standards to which they had prescribed in their respective organizations.

Concern was however raised as to the binding effect of this accession as the only sanction for violating companies appeared to be the public announcement of a signatory’s failure to comply with the code of ethics, which was considered by participants to be insufficient toward ensuring accountability and conformity with the prescribed standards.


  1. SHARED EXPERIENCES

The participants were enlightened by the experiences shared in confronting the exploitative practices of extractive industries in other African countries. Two presentations concerning the situation in Uganda and Ghana related the similarities of the two countries experiences to that of Kenya as well as the lessons learnt.

  1. Oil extraction in Ghana

In this session, the panelist, a lawyer who had worked on the impact of oil extraction on communities in Ghana, remarked on the successes and failures they had experienced in attempting to curb the negative effects that oil extraction had had on indigenous communities in Ghana. Participants were informed how, for centuries, oil had been extracted from Ghana with little to no benefit being derived by local communities. The companies had been involved in incidences of environmental degradation and pollution that affected large segments of the community. Nonetheless, the companies had come to hold influence over local government security forces that were used to impose the will of the companies over the community, often times with damaging effect to their human rights and fundamental freedoms.

Later attempts to reign in the inequities exacted by the extractive industries have been made difficult due to the intricacies of pre-existing contracts between the government and the oil companies that absolved the extracting organizations from virtually all social and environmental culpability. Contractual gimmicks such as stabilization clauses (i.e. clauses that ensure that the company will never be affected by laws enacted after the entry into force of the contract) ensured that laws could not be enacted to correct injustices and inequities agreed to within the contract such as tax incentives favourable to the extraction companies.

Participants were admonished that Kenyan CSOs needed to come together and consolidate their initiatives toward ensuring that there is shared prosperity from the expropriation of local resources. This includes having a collaborative relationship with government which is often both a facilitator and victim of the unfair exploitative practices of multinational corporations. The panelist stressed the need to be involved in open dialogue with all stakeholders to ensure transparency, especially in the process of negotiating and concluding contracts with the extraction companies as this is where most of the mischief is hidden.

Participants were also cautioned against the application of secrecy and state confidentiality guarantees to withhold information regarding the terms and conditions of operation agreed upon between the state and the extraction company in question. The participating CSOs were encouraged to build and sustain expertise on all the operative aspects of the said industries and to familiarize themselves with all local and international laws relating to business and the human rights if they hoped to be successful in monitoring and influencing the conduct of extractive industries.



  1. Oil extraction in Uganda

Participants were taken through a brief history of the mineral extraction processes in Uganda and the exploration for oil in the Albertine Graben – an oil rich section of land along the Great Rift Valley – by the Hardman Resources Ltd (now Tullow Oil plc), China National Offshore Oil Corporation (CNOOC) and TOTAL oil companies, as well s the laws and policies developed to facilitate the extraction.

The panelist explained how, in spite the legal guarantees under the Ugandan constitution, the weak legal framework, which includes archaic laws such as the Petroleum Act (1985) seems to guarantee the oil companies privileges above the individual civil liberties codified within the Uganda Constitution. People in the Albertine region, for example, had been arbitrarily evicted from their areas of residence, without prompt or adequate compensation to make way for the industries and extraction projects for the oil companies.

Participants were clued into how the process of exploration, which had not involved consultation with the relevant communities, had resulted in forced evictions that were disguised as relocations and how restrictions were implemented on access to land allocated to the extraction companies. CSOs and other entities had to seek authorization to gain entry into the allotted properties to look into human rights abuses, of which authorization was rarely awarded

The panelist also described how oil drilling has had a detrimental impact on the environment which in turn has had an adverse impact on the ecosystem and food production in the respective areas. Significant environmental pollution through the emissions of gas flares had affected the food supply, as did the dumping of chemical waste on grazing land which, as it was owned communally, was deemed free land. The panelist asserted that the companies did not profit the communities with regards to the much touted promises of employment as nearly individuals within the communities lacked the advanced and specialized skills required by the companies.

Yet in spite these negative social and environmental impacts, the corporations were allowed to operate under a cloak of secrecy with the agreements signed between the oil companies and the Ugandan government being hidden from the Ugandan public including Members of Parliament


  1. TAXATION OF EXTRACTIVE INDUSTRIES

One of the participants added to the points alluded to by previous panelists, informing participants that in their experience dealing with oil extraction companies that they had found that the extraction organizations avoided employing individuals from within the communities, opting instead to recruit only workers with the specialized skills and expertise they require – which expertise was usually absent among the local community. Furthermore, the companies rarely used domestic suppliers and stick to foreign suppliers for the components they require for operations which are always capital intensive.

The participant specifically warned that the most significant benefit that could be expected was the tax revenues on the proceeds of the extraction and that this was the main mechanism through which the ordinary citizen could expect to benefit. Yet this was the most denied benefit through the corrupt contracting processes that are often shrouded in extreme secrecy. The award of tax incentives to cover the cost of setting up operations and the use of stabilization clauses prevented governments from realizing substantial gains in tax revenues. The participant argued that these incentives were unnecessary and moreover, that the multinational oil companies that pushed for these incentives were often set up in tax havens which not only limited their taxation requirements but ensured that the gathering of information on their respective revenue streams was next to impossible.



  1. REVIEW OF THE MINING AND MINERAL BILL (2001)

During this session the participants were taken through the strengths and weaknesses of the proposed Mining and Minerals Bill. The participants were briefly taken through the structures proposed to be created within the bill as well as their powers and functions. The presentation itemized that while the proposed Bill was better than the present legislation in that it appeared to promote the right to equitable distribution of resources, respect individual rights to property and require environmental impact assessments to be conducted before mining and extraction activities commence, it had several setbacks.

First, the provisions of the Bill could be waived by the relevant Cabinet Secretary without condition. Second, the Bill did not cover the extraction of oil meaning that the Petroleum Act of 1986 (Cap 308) remained in force. Thirdly, there is no emphasis on consultation, with an unrepresentative Advisory board acting as a representative of the affected communities, and most significantly, there were no strict requirements for the disclosure of information to the public.



  1. DEVELOPMENT OF AN ACTION PLAN

The participants established that the discussions had revealed the following essential areas for follow-up action in order to ensure that the lessons learnt at the convention were integrated and adopted in the approach by the participants towards securing the greatest benefit for all in the exploitation of the countries natural resources:

  • Coordinate civil society efforts, and strengthen affiliations with donors and development partners

  • Building collaborative relationships with the relevant state agencies,

  • Engaging in research and development of expertise on law, policies and international instruments and mechanisms relative to the extraction industry

  • Increase expertise and acumen in the extractive and commercial operations of the relevant extractive industries

  • Push for freedom of information to monitor the agreements between multinational corporations and government with regards to obligations, priviledges concessions and taxes

  • Engage in capacity building and create public awareness over the threats and opportunities posed by the extractive industry to the social, economic and human rights situation of local communities and the state in general

These key action points were shared out as illustrated in the following action matrix:

ACTION MATRIX



AREA OF CONCERN

RESPONSIBLE

TIME FRAME

FOLLOW-UP

  1. CONSOLIDATION OF WORKING GROUP ON BUSINESS AND HUMAN RIGHTS

  • Development of a working coalition




  • Consolidation of expertise on extractive activities

KENRA

TAX JUSTICE NETWORK AFRICA










  1. CAPACITY BUILDING

  • Review of existing laws and legal frameworks




  • Review of existing policies




  • Mapping of communities and needs




KHRC and KNCHR

KHRC and KNCHR


KENRA and ACTION AID









  1. BULDING PARTNERSHIPS



  • Development partners



  • Extraction Companies*

WORKING GROUP ON BUSINESS AND HUMAN RIGHTS

WORKING GROUP ON BUSINESS AND HUMAN RIGHTS









  1. PUBLIC AWARENESS

  • Access to information




  • Civic education




  • Public engagement framework




  • Development of an advocacy blue-print

(To be identified)
KNCHR
KNCHR

KNCHR








  1. REVENUE COLLECTION AND DISTRIBUTION (EXTRACTIVE INDUSTRIES)

  • Taxation




  • Devolution

TAX JUSTICE NETWORK AFRICA

TAX JUSTICE NETWORK AFRICA









It was agreed that the question of collaborating with businesses and players within the extraction industries would be a subject of future discussion

  1. WAY FORWARD AND CONCLUSION

The organizers concluded the workshop by thanking all the participants for their active participation and valuable contributions to the discussions. All participants agreed that the workshop had provided a valuable opportunity for reflection upon the local regional and international developments regarding the extractive industry, as well as the legal and policy discussions around the field of business and human rights vis-à-vis the extractive industry.

The participants agreed that the consolidation of a working group of CSOs, CBOs as well as NHRI’s from other countries across the region would be instrumental in pressing for legal and policy changes in the field of business and human rights especially as they relate to the extractive industry. Consequently, the participants undertook to engage in continual dialogue on the challenges, threats and lessons shared during the convention. KNCHR committed to convening further meetings to monitor the implementation of the action initiatives identified and agreed to at the convention






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