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Mineral finds raise counties’ wealth profiles

EXPLORATION:FORMER MARGINALISED ZONES NOW A GEM TO INVESTORS The recent discovery of valuable minerals in Kwale, coal in Kitui, and oil and a large reservoir of water in Turkana bode well for the development of these regions.

Suddenly, far-flung Turkana, semi-arid Kitui, and poverty-wracked Kwale are becoming the darlings of investors, thanks to their mineral and oil finds

Suddenly, far-flung Turkana, semi-arid Kitui, and poverty-wracked Kwale are becoming the darlings of investors, thanks to their mineral and oil finds

In less than a decade, Turkana County is projected to challenge Nairobi as the country’s biggest contributor of national wealth.
Currently, Nairobi County generates over half of the country’s gross national product (GDP).

It is also the second richest county after Kajiado. In contrast, Turkana’s contribution to the country’s GDP is currently insignificantly ranked among “others“ .
On the poverty index, it ranks as the poorest county with 94 per cent of the population living below the poverty line.

However, the recent spate of discoveries of valuable extractive minerals is expected to change this, with experts now saying that Turkana, Kwale, and Kitui are to Kenya what Africa is to the world; the next growth frontier.

The trio has recently made news in the discovery of extractive natural resources which, if well utilised could change the poverty matrix in this country.

“There are counties that were previously classified as marginal which will emerge as economic giants,“ said Mr George Wachira, director of Petroleum Focus Consultants and an analyst in petroleum and infrastructure.
Highest poverty levels Kwale and Kitui counties are among areas with the highest poverty levels, according to the June 2013 edition of the Kenya County Fact Sheets that is published by the Commission on Revenue Allocation. Kwale ranks 42nd on the poverty index with 75 per cent of its population living on less than a dollar-anda-half a day while Kitui is at position 35 with 64 per cent of the population unable to put on the table three meals a day.

Mid last week, Radar Technologies International (RTI) announced the discovery of two large aquifers in Turkana County containing 250 billion cubic metres of water that could meet all of Kenya’s needs for 70 years.
The Lotikipi aquifer holds more than 900 per cent of current water reserves. “… it could be a game changer within the country,“ Mr Abou Amani, a Unesco scientist who is part of the team that discovered the water, told ITV News. The discovery came barely a week after Canadian oil explorer Africa Oil Corporation increased its estimate for Kenya’s oil find in the area by five times, thereby profiling the marginalised county higher as a potential key contributor to the economy. The unconfirmed estimation of 10 billion barrels of crude oil puts Kenya among the top 20 oil producers in the world.

“The discoveries will have comparative advantage, which will attract the private sector in these areas, meaning increased contribution to the gross domestic product (GDP) from the respective counties,“ said Mr John Mutua, an economic analyst at the Institute of Economic Affairs.

The importance of the oil discovery to the country’s GDP is underpinned by the fact that it will save Kenya Sh251 billion a year, the money spent to import the almost 80,000 barrels of oil a day to meet the country’s demand.

The massive infrastructure that will have to be put in before oil production starts will also be a big boost to the economy. The two companies exploring oil in Turkana, Tullow Oil and Africa Oil, are optimistic that production can start by 2016. Turkana is also home to Africa’s largest wind power plant, with a capacity of 300 megawatts that is being developed by the Lake Turkana Wind Power Company.

Once completed, the project will see Turkana County increase its level of access to electricity among households from the current 2.4 per cent.

Exploitation of these resources, according to Mr Wachira, is bound to bear profound benefits to the local people and the concerned county governments.

However, he cautions that there will is a need for the local governments to work closely with the national government so as to come up with frameworks for early exploitation of the resources.

“These counties will need to work very closely with the parent ministries for early commercialisation of the resources that have been found there,“ said Mr Wachira.

According to him, apart from EFFECT OF MINING ON ADJOINING AREAS Commercial exploitation of the Turkana oil resources will also have spill-over benefits to other counties such as Lamu, where the construction of Kenya’s second port that is part of the Lapsset project is underway.

Analysts say that in addition to the benefits derived from natural resources, marginalised counties also stand to benefit from the devolved government system where such functions as development of agriculture, county roads, and livestock and health facilities have been charged on county governments. 251 l . The amount in shillings that the country spends every t year to import 80,000 bar rels of oil needed every day.
Discovery of oil deposits in Turkana and projected com mercial production could save Kenya this amount.

revenue earned from the sale of the respective minerals, the counties will benefit from the establishment of supportive industries that will create employment opportunities for the local population in addition to direct employment in the mining firms.

“The governors of these counties should by now be engaged in manpower development, especially in technical and technician categories, by setting up local polytechnics in order to tap into the benefits resulting from the discoveries,“ said Mr Wachira.

Since the discovery of oil deposits at the Ngamia 1 well located in Turkana County by British firm Tullow Oil and subsequent oil and natural gas discoveries, the country has become an almost prime invest ment destination as private com panies seek to set up in Kenya as part of their strategy to spread reach both within the country and the region.

Cortec Mining Kenya, the company behind the more than Sh8 trillion niobium and rare earth metals discovery in Kwale, County has indicated that it will spend about $100 million to set up a mineral processing plant in Kwale. Base Titanium, a company licensed to mine ti tanium in Kwale, estimates that it will spend $100 million of the total $300 million (Sh25.8 billion) capital cost for the titanium project directly in Kenya on contractors, machinery, goods, support services, and employment.

According to the company, the longer term benefits derived from the project will influence socio-economic factors in Kwale region in terms of infrastructure development, which will be handed over to local authorities.

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-Nation

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