The East African Standard of 13th September 2010 led with the headline ‘Kenya strikes gold!' The caption evoked mixed emotions but little surprise, since Kenyans have become accustomed to winning gold medals in athletics. This was exemplified during the just concluded Commonwealth games in Delhi, where 12 Gold medals were won. Striking gold was accordingly not very hot news.

But the gold referred to by the paper was of a different kind. It is the type that transformed South Africa and its commercial hub, Egoli - the city of gold - to a haven for gold diggers and investors to its undisputed status as the continental economic heavyweight.

It is also the kind that has brought doom, tears, agony and misgivings about the real value of precious metals to Africa - from Sierra Leone to the Democratic Republic of Congo.

It is therefore not surprising that for many Kenyans, the realisation that it was not the ‘usual' athletics competition gold but real gold, evoked restrained excitement. Jubilation was tempered by the apprehension of the demonstrated potential of gold to cause untold suffering and conflict.

While Kenya's potential as a mining powerhouse in Africa is yet to be confirmed, there is little doubt that mineral wealth in Kenya is a big deal. Like many other African countries that look to minerals to steer and power their economies, it has the promise to be either a blessing or a curse.

If Kenya is to reap the benefits of gold mining and avoid the pitfalls of those for whom it has become a curse, it is imperative that it adopts an effective framework on mining. Such a framework should promote and uphold: international human rights standards and norms; good governance practices; transparency and accountability; and public consultation and participation - often missing in the mining economies of African states.

An effective mining framework must promote the involvement and sustainable development of local communities where such wealth is located and in turn, that of the country. Consultation and participation of the relevant community needs to happen from as early as during the process of awarding of prospecting and exploration rights. If the processes are shrouded in secrecy this alienates the locals and feeds the suspicion that only a few well-heeled individuals will benefit from the mineral wealth. Such exclusion is often a cause of conflict between investors and local communities. The secrecy of mining agreements and the lack of involvement of citizens remains a major source of mistrust and potential conflict. A case in point is titanium mining in Kwale District near the coast of Kenya, where the controversy over relocation of displaced landowners has dogged the mining company.

Where local communities within mining concession blocks have felt disregarded and alienated, they have invaded, looted and destroyed investors' property. According to the Chairman of the Kenya Chamber of Mines, Joe Gatecha, ‘the failure by the Government to enforce mining laws is partly to blame for the fiasco'. While that may be true, it is also important to note that the current legal and policy framework in Kenya on mining is outdated and deficient. ‘The current Mining Act, which dates back to the 1940s, has been termed as a major block in the development of the mining industry'.

A revised framework should aim to enhance the technical skills and capacity to exploit Kenya's mineral wealth reserves to its fullest potential whilst according local communities equitable share of the wealth. It should also promote foreign investments in the mining industry and ensure its benefits develop the economy of the country.

Until the recent discovery of substantial unexploited mineral reserves in Kenya, artisanal and small-scale miners have largely carried out mining activities. Their activities have mostly been unregulated, making the industry a robust source of income to the local communities in surrounding areas and an essential support to local entrepreneurship. However, according to media reports, with the sizable discoveries, there is a proliferation of foreign mining companies that may threaten the livelihoods of small-scale diggers and artisanal miners. To avert potential conflict between the mining companies and local communities, the government will need to recognize artisanal miners as an essential part of the mining economic sector and incorporate them in the mainstream mining industry.

The recent gold find has also raised the spectre of corruption among Kenyans, whose memory of the Goldenberg scandal is still fresh. Fabricated gold exports were the core method used by the corrupt network that extorted hundreds of millions of shillings from the Central Bank of Kenya in illegal tax refunds and money laundering schemes. The Goldenberg web and subsequent investigations revealed that the government subsidized mineral exports far beyond the actual price, swindling taxpayers of millions of shillings, which only benefited a few cronies of the Government of the day. To this day none of that money has been returned to state coffers.

The anti-corruption institutions of Kenya therefore need to be vigilant and effectively enforce the legal framework to guard against exploitation of the public through get-rich-quick scams veiled as mineral finds. The promulgation of a new Constitution in August 2010 is expected to ensure integrity and independence of state institutions. If that holds, corruption and money laundering schemes might be dealt with effectively.

The fact that Kenya does not yet have a comprehensible mineral tracking and certification scheme is problematic and presents potential loopholes for a scandal of Goldenberg magnitude. Kenya's proximity to the DRC already raises the danger of minerals being smuggled into Kenya - for re-exportation as a Kenyan product.

In order to unlock the full potential of Kenya's mineral wealth, the proposed mining and mineral bill should incorporate public accountability and transparency as essential tenets to ensure that the nation reaps maximum benefit from the mining industry. The Ministry of Environment and Natural Resources should begin by providing information on the implications of the current state of the extractive resource industry in Kenya.

The Draft National Policy on Mineral Resources, and the Mining and Minerals Bill promise a mining legal framework and policy with a clear direction on mineral exploitation ventures. It is hoped that this will foster investor confidence and ensure that high value mineral exploitation is a blessing to the country rather than the proverbial curse.

Written by: Gladys Mirugi-Mukundi, Research Intern, Organized Crime and Money Laundering Programme, ISS Cape Town