You can almost hear the “cha-chings” upon the discovery of oil in Kenya, and while it’s “too soon for Kenyans to reach for the champagne bottle”, will it mean that Kenya will prosper from oil revenues?
The discovery of oil can mean a lot of things. It can mean that governments have revenue to develop infrastructure, and work on other improvement projects, the promotion of agriculture, and the investment in human capital. Or, it can mean the obstruction of democracy and equitable economic growth due to a lack of transparency and accountability from the oil revenues by companies to the governments.
When Uganda discovered oil, for example, there were concerns that, considering Uganda’s role in many regional conflicts, that the revenues from oil would cause Uganda to increase military involvement far beyond the region. There were also concerns that a variety of groups would scramble for control over the oil and its revenues.
And without a need for great explanation, Sudan has long grappled with its oil industry, and now with the recent formation of South Sudan, the tension is growing between the two nations over the oil industry, with violence as a result.
The oil revenue curse, as it goes, can create conflicts, instability, and underdevelopment. The Brookings Institute calls it the “Natural Resources Curse”.
So now that there is oil discovered in Kenya, will instability, conflict, and underdevelopment prevail?
The oil was discovered in impoverished Turkana County, and people seem to be quite hopeful that the oil profits will help their nation overcome poverty. Rahab Ngumba, our IIRR Kenya Country Director, believes that “it is significant that the oil discovery was in Turkana County…it is one of the least developed in the country on all fronts” and she is hopeful that the discovery of oil can mean improvements not only in local infrastructure and livelihoods, but for regional transportation and communication as well. One resident, the Executive Director of a local non-profit, says “that the money from oil will mean schools, networks, bursaries; it will mean everything that an ordinary Kenyan will need for their lives to move on.”
There is always the concern that the profits from oil have a good chance of not actually trickling down to the Kenyan people, especially the Kenyans in Turkana, based simply on the history of other oil producing nations in Africa. Nigeria and Burkina Faso have been producing oil for decades, and local populations have yet to see any real impact on their daily lives from the oil profits. As one of our Kenya staffers put it, “Oil discoveries in Africa have [transformed] from being a blessing to becoming a dreaded curse on the continent. The lost dreams in Nigeria, Angola, and Equatorial Guinea and the horrendous stories from the Niger Delta are nothing to be celebrated.”
There is also the concern that Kenya will have to account for environmental impact. That means that Kenya will also have to plan for environmental action to prevent oil-spills and environmental pollution.
Oil doesn’t have to ruin the growth of a nation, but Kenya will have to be careful about the choices it makes if it wants to truly prosper from oil revenues. Local Kenyans are excited, as they should be, about the prospect of their families coming out of poverty in the coming decades, but let’s hope this case doesn’t become another cautionary tale of the misuse of oil revenues. From a development standpoint, Rahab says, ” We [Kenyans] need to ensure that there will be good mechanisms to bring some oil profits into local community development.”
Joseph Irungo, IIRR Kenya Field Project Manager, believes,” Kenya must tread this path with great caution and avoid the pitfalls where her more endowed peers have fallen by the wayside”.
At IIRR, we are hopeful that Kenya can transform oil revenues into meaningful community development, but so history doesn’t repeat itself, Kenya’s oil should be treated with cautious optimism.