Policy Reform Memo addresses restrictions in Kenya’s mining sector to facilitate FDI and attract regional investment
The USAID Hub works with the region’s public and private sectors to expand opportunities for trade and investment in the East African Community (EAC) by supporting the accelerated implementation of the EAC Common Market Protocol (CMP). A key focus of CMP implementation is to support the enactment of laws, regulations and administrative measures that facilitate the free movement of capital, services and goods in the EAC. In line with these principles, the Hub drafted a reform memo that addresses restrictions on foreign participation in the mining sector in Kenya’s Mining Act 2016.
Recently, there have been calls in Kenya to reform the Mining Act. The Kenya Chamber of Mines chief executive Moses Njeru told the East African newspaper that the law was seen as an inhibitor for the sector, citing its requirement for investors to obtain consent from communities occupying targeted land before receiving licenses to explore and extract minerals. The Hub’s reform memo contributes to these broader private-sector led efforts by highlighting another investment-inhibiting area in the act.
Section 38(1) of the Mining Act prohibits the government from issuing prospecting and mining rights on community land without the consent of the community, despite the Act stipulating that every mineral is the property of Kenya and is vested in the national government in trust for the people of Kenya. In addition, Section 124 (1) of the Act provides that artisanal mining rights shall only be granted to applicants that are Kenyan citizens in the case of individuals, and only those that have a least 60 percent of their shareholding held by Kenyans when it comes to companies. Section 164 (1) of the Mining Act provides that an applicant for a mineral dealer permit should have 60 percent of shareholding held by Kenyans.
These provisions are foreign direct investment (FDI) restrictive and inconsistent with Article 24 of the EAC CMP which requires Partner States to remove restrictions on the free movement of capital. These restrictions include those based on nationality, place of residence, current payments and where capital is invested. Annex VI of the Protocol identifies 20 operations, including direct investment operations (operations 17 to 19), that should be free from legal and regulatory encumbrances. These inter alia facilitate direct international acquisitions, greenfield investments, re-investment of profits in enterprises and outward direct investment.Read more
East African Community Partner States continue to introduce tariff and non-tariff barriers that are hindering intra-regional trade and putting integration at risk. Manufacturers of confectionery in Kenya, oil and fats in Uganda and a wheat and juice producer from Tanzania reported encountering tariff and non-tariff barriers that blocked them from entering regional markets. Read more. Source | East African
A regional business lobby has been taking a lead to advocate for liberalization of professional services across the EAC borders. The body, East African Business Council (EABC) brought together key players from the business community, to share insights, which were instrumental in the formulation of the Mutual Recognition Agreements for Accountants, Architects, Engineers and Veterinaries. Read more. Source | The Exchange
So far the benefits of the Single Customs Territory are already being witnessed by both the public and the Private Sector in the region, The East African Business Council Chairperson has noted.
According to the EABC Chairperson Mr Nicholas Nesbitt, with the Single Customs Territory regional customer-centric procedures have been put in place eliminating duplication and reducing the cost of doing business. Read more. Source | The Exchange
The East African Community (EAC) bloc is developing a regional Science, Technology and Innovation (STI) Policy to boost its competitiveness, officials said on Tuesday.
Gertrude Ngabirano, Executive Secretary of the East African Science and Technology Commission (EASTECO), told a media briefing in Nairobi that the draft policy will be submitted to the EASTECO Governing Board for adoption before consideration and approval by the EAC Council of Ministers of the six member states. Read more. Source | New Times
Logistics does not operate in isolation, according to a cross-section of policy experts, sector actors and industry analysts Daily Monitor spoke to. Logistics and transport sectors naturally feed into each other. Typically, logistics is related to the movement of physical goods and information. Efficient logistics connects firms to domestic and international markets through reliable supply chain networks. Read more. Source | Daily Monitor
World Food Programme has hailed resumption of marine cargo transport services on Lake Victoria between Mwanza Port and Port Bell in Uganda last week after stopping for ten years. WFP National Logistics Officer, Mr Mahamud Mabuyu who witnessed the launching of the trips to Port Bell said the resumption meant that the new route by lake and rail from Tanzania would cut food delivery time by more than half. Read more. Source | Daily News
Kenyan officials have announced the end of the long-running trade dispute with Tanzania following a bilateral meeting between the two states in Dar es Salaam. The move will see Kenya-made goods such as textiles, which had been denied preferential access, get to the Tanzanian market with much ease. Read more. Source | East African
The Government of Tanzania has launched a business plan to help eradicate a number of challenges faced by businesses in the country. The initiative rolled out on Tuesday seeks to help deal with the barriers both private companies and potential investors face in their operations in the country. The Government is adamant the new plan to provide solutions for the market key players and business entities will spur the economy and create a conducive business environment for more businesses to venture in. Read more. Source | The Exchange
Rwanda’s tax incentives are probably too generous and risk being unsustainable in the long run, finance experts from the International Monetary Fund (IMF) said yesterday. According to the IMF, the tax-based incentives are important to attract investors, however, in the long run, such incentives become an obstacle to domestic resource mobilization efforts. Read more. Source | New Times