Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of 'needs', in particular, the essential needs of the world's poor, to which overriding priority should be given; and • the idea of limitations imposed by the state of technology and social organisation on the environment's ability to meet present and future needs. Hence for sustainable development to be achieved, it is crucial to harmonise three core elements: economic growth, social inclusion and environmental protection. These elements are interconnected and all are crucial for the well-being of individuals and societies.
Hence for sustainable development to be achieved, it is crucial to harmonise three core elements: economic growth, social inclusion and environmental protection. These elements are interconnected and all are crucial for the well-being of individuals and societies.
(Image courtesy of Our Common Future, Chapter 2: Towards Sustainable Development)
(Our Common Future, Chapter 2: Towards Sustainable Development
From A/42/427. Our Common Future: Report of the World Commission on Environment and Development http://www.un-documents.net/ocf-02.htm )
This exists when a project has the ongoing approval within the local community and other stakeholders, ongoing approval or broad social acceptance and, most frequently, as ongoing acceptance.
The Social License to Operate: SDGS
The notion of revenues generated by oil and mining operations refers chiefly to government payments, compensation, and community investments. Government payments are taxes and royalties as well as other payment schemes that may exist between mining companies and various levels of government.
Oil, gas and mineral revenues are special because they are finite, volatile and, if large enough, can negatively impact other industries. They also generate large economic rents and are location-specific, which can lead to conflict over their control. As a result, they may need to be managed and distributed differently from other types of government revenue.
i. Compensation refers to payments or other benefits (such as housing, in case of resettlement) provided by companies to affected communities to compensate for economic, social, environmental, or cultural damage directly caused by the mining operation.
ii. Community investment refers to voluntary actions or contributions by companies that are beyond the scope of their normal business operations and intended to benefit local communities in their area of operation.
Transparency can be defined as openness in the management of public affairs. Public accountability means the obligations of persons/authorities entrusted with public resources to report on the management of such resources and be answerable to the public
Transparency is a fundamental tool to promote efficiency and accountability in converting natural resource wealth into long-term social and economic development.
For transparency to be effective, information disclosures must be relevant, accessible, timely, and accurate.
PWYP is a global coalition of civil organisations seeking transparency in the extractive industries. It has three major pillars of advocacy:
EITI is a multi-stakeholder initiative that aims to promote openness and accountability in the management of natural resources throughout the decision-making chain.
Each country that implements the EITI has a multi-stakeholder board that publishes a report reconciling information from government and extractive companies throughout the decision-making chain.
The OGP is a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption and harness new technologies to strengthen governance. Kenya is part of the OGP.
The Natural Resource Charter is a set of principles, including policy options and practical advice, for governments, societies and the international community on how to best manage resource wealth.
The second precept calls for transparency of information throughout the decision-making chain to be a foundation of resource management.
Accounting standards create requirements for companies to disclose information if they are to be in compliance with certain business standards. For example, the International Financial Reporting Standards (IFRS) sets the requirements for accounting practices, and therefore disclosure requirements, in many countries.
Good governance entails conducting of public affairs and managing public resources effectively in order to guarantee the realisation of human rights and social welfare. The following are the principles of good governance:
(Image courtesy of Extractives Baraza 2017)
This means that the power of the government comes from the people. Ultimately, the government is elected by the citizens of Kenya, to whom they are responsible.
A "sovereign" is a ruler. The people of Kenya, as citizens, are the rulers of Kenya. The people they elect to rule them make up the government, but that government must always answer to the people.
Devolution is the process that involves the transfer of functions, resources, power and responsibilities from the central government to county governments or other decentralised organs in order to promote participatory democracy and sustainable development for the benefit of all citizens. In essence, decentralisation is a process of delegating sovereign power from a central authority to different levels of government. Kenya's devolution model has several distinct features.
The most prominent are:
The "resource curse" refers to the negative growth and development outcomes associated with minerals and petroleum-led development. In its narrowest sense, it is the inverse relationship between high levels of natural resource dependence and growth rates.
It refers to the failure of many resource-rich countries to benefit fully from their natural resource wealth, and for governments in these countries to respond effectively to public welfare needs.
Manifestations of the Resource Curse:
(Image courtesy of Extractives Baraza 2017)
This is a country's 'development' based on its overwhelming dependence on revenues gleaned from the export (and not the internal consumption) of petroleum. This dependence generally is measured by the ratio of oil and gas exports to gross domestic product; in countries that live from petroleum rents, this figure ranges from a low of 4.9 percent (in Cameroon, a dependent country running out of oil) to a high of 86 percent (in Equatorial Guinea, one of the newest oil producers). Dependence is also reflected in export profiles, with oil independent countries generally making up from 60 to 95 percent of a country's total exports. Oil-dependent countries can be found in all geographic regions of the world, although they are most commonly associated with the Middle East and, more recently, Africa.
This phenomenon occurs when resource booms cause real exchange rates to rise and labour and capital to migrate to the booming sector. This results in higher costs and reduced competitiveness for domestically produced goods and services, effectively "crowding out" previously productive sectors.
This is characterised by resource revenues being wasted by governments who lack the institutional capacity to use these windfall gains efficiently, therefore what features prominently here is corruption and rent seeking behaviours (both defined below).
Rent seeking behaviour
The term "rent" in the extractives context refers to unearned income or profits "reaped by those who did not sow." According to economists, rents are earnings in excess of all relevant costs, including the market rate of return on invested assets. They are the equivalent of what most non-economists consider to be monopoly profits. "Rent-Seeking" refers to efforts, both legal and illegal, to acquire access to or control over opportunities for earning rents. In oil-dependent countries, rent-seeking refers to widespread behaviour, in both the public and private sector, aimed at capturing oil money through unproductive means.
Reference: NRGI Reader- Resource Curse
Corruption may broadly be defined as the misuse e of public power or resources to enrich or give an unfair advantage to individuals. In Kenya, despite constitutional, political and market reforms, several business surveys reveal that corruption is still widespread and that companies frequently encounter demands for bribes and informal payments to 'get things done', extractive ones included. The public procurement sector also suffers widespread corruption - the use of 'agents' to facilitate business operations and transactions is widespread and poses a risk for companies, particularly at the market entry and business start-up stage, which will eventually be borne by Kenyans.
Common forms of corruption: