APRM • SECOND COUNTRY REVIEW REPORT OF THE REPUBLIC OF KENYA 408. Various steps have been taken to develop capacity for technology adoption and value addition and integrating MSMES into the market value chains, especially in the agriculture sector. While export products and markets are now diversified, this is still limited to agricultural products. 409. The country’s membership to the EAC has enabled it to conduct its external trade engagements at the EAC level and allows it to take into account commitments at the regional level. However, despite successfully using Export Processing Zones (EPZ), the Manufacturing Under Bond (MUB) and the Duty Remission Scheme to promote exports, Kenya has lost its share in exports of manufactured products to the regional because of fierce competition. Extractive industry 410. Kenya is undertaking broad-based reforms to ensure the extractive sector develops sustainably. A comprehensive set of legal and policy instruments have been adopted, which includes the Mineral and Mining Policy 2016, approved by cabinet, and a consolidated and progressive Mining Act 2016, enacted by Parliament. The Petroleum Bill passed by the National Assembly is awaiting approval by the Senate. Kenya has also drafted and validated through stakeholder processes a set of Mining Regulations to provide more specific guidance for implementing mineral-led development. 411. The legal frameworks include core principles for mineral sector governance which considers ownership, transparency, equity, participation and environmental sustainability as well as linkages. For example, the recently adopted Mining Act vest ownership of all minerals ‘’in the Republic in the national government, in trust for the people of Kenya.’’ The Act includes provisions for small scale mining and areas reserved for people-oriented artisanal and small scale mining operations. The Act also established the National Mining Corporation which shall be the investment arm of the national government in respect to minerals. To facilitate transparency through price discovery, the Act further establishes a Metal Commodity Exchange as well as a geoscience database. Holders of large scale mining license with capital expenditure exceeding a prescribed threshold are obliged to list 25% of their equity on the local stock exchange. The policy frameworks include strategies to ensure that benefits accruing from mineral exploitation are shared equitably between the national and county governments including local communities. It also include provisions for a stable, transparent and predictable and competitive fiscal regime, that is able to maximize revenues from mining while at the same time attracting long term investment in the mining sector. 412. Kenya operates a contractual mineral regime through provisions for mineral development agreements for large scale mining operations beyond $500million. However, in the interest of good governance, the principles guiding the negotiation of such contracts are spelt out transparently in the law. The contracts negotiated between government and mining companies remain secondary and do not substitute for the law or constitution of Kenya. The contracts agreed to with the government have to be ratified by the parliament and the senate as well as made public. | 177 |