The economic contributions of artisanal and small-scale mining in Kenya: Gold and gemstones

October 26, 2018
A miner crushes ore in Osiri, Migori.

Artisanal and small-scale mining (ASM) activities have been a significant source of employment for Kenyans, playing a critical role in poverty reduction and rural development. Even so, limited data and information has been available concerning the current and potential economic development opportunity that the small-scale mining sector represents.

As a strategic response, Pact with support from the U.K. Department for International Development (DFID) co-led a study with Alliance for Responsible Mining (ARM) to understand the economic contribution of small-scale mining in Kenya, as well as in Rwanda and Uganda. The Kenyan study included desk study - inclusive of previous and ongoing regional initiatives (Global Mercury Project, the Africa Minerals Development Centre’s ASM workstream, and UNDP’s Development Minerals initiative) as well as new field studies in the counties of Taita Taveta (focusing on gemstone mining ASM communities) and Migori (gold mining ASM communities). This research project sought to document value chains and make targeted recommendations on how to improve the economic performance of the diverse sector.

The research found, in 2015, an estimated 800,000 Kenyans (1.7% of population) were dependant on the ASM sector, which contributed 0.8% to the gross domestic product (GDP). Non-metallic and construction minerals sector employ 90,000 people (quarries: 40,000, sand: 30,000, other: 25,000), of which approximately 70,000 (75%) are artisanal and small-scale miners. The gold mining sector, inclusive of Taita Taveta, Migori, Siaya and Turkana and the seasonal nature of the work, provides work for some 40,000 Kenyans, whilst the gemstone sector countrywide employs approximately 30,000 miners. Thus, the ASM sector provides primary livelihood employment for an estimated 140,000 ASM miners.

Field research in Migori mining sites indicated that gold mining is the main income-generating activity in the sub-counties surveyed with men constituting 92% of the extraction workforce while women constitute 62% of the mineral processing (crushing, milling, sluicing, amalgamation) workforce. This sharp division of labour along gender lines was a significant finding of the research.

The gold selling price in Kampala - the regional gold hub, is 98–99% of the international market price (LBMA), allowing the Kenyan seller who exports gold (informally) to repatriate foreign currency directly into the Kenyan economy. An estimated 50% of the final value of this traded gold remains with the individuals working in ore extraction, processing, and mineral trading: contributing an estimated USD 37 million per year in Migori County alone. This represents a substantial contribution to local growth, employment, and development.

The number of gemstone miners in Taita Taveta is approximately 10,000 with women comprising only 15% of the ASM workforce. Both men and women engage in mining because they earn more than those working in agriculture alone. These 10,000 miners produce and trade approximately USD 120 million worth in gemstones per year, representing local contribution to the Kenyan economy of roughly USD 80 million per year. Miners’ income spent in VAT-taxed goods in Taita Taveta contributes an estimated USD 1.6 million annually to the Kenyan national budget: an amount far exceeding royalty revenue collected by the government.

Notwithstanding these significant contributions, the study highlights existing challenges in the sector.

Gender disparity extends to the distribution of benefits and negative impacts from ASM. For instance, in Osiri, women comprise 38% of the ASM workforce, yet they yield only 11% of the revenue share. In Taita Taveta, women constitute only 15% of the workforce, most of which involve lower paying jobs in service provision, such as cooking and hauling water. Negative impacts also relate to women and girls’ domestic roles, such as in meeting the food security needs of households.

In Migori, extensive use of mercury in the extraction of gold is a significant environmental and occupational health and safety (OHS) issue. In Taita Taveta, the main environmental and health risks associated with ASM relate to poor conditions at mine camps and within the mine operation areas. The nature and severity of environmental and occupational risks in Taita Taveta’s mines is tied to water scarcity.

The Kenyan government has proposed to increase the mining sector’s contribution to 10% of GDP by 2030 through value addition and the implementation of new policies.

The research indicated that only a small portion of Kenyan gemstone are locally cut. As the main global source of Tsavorite, Taita Taveta County is uniquely positioned to establish a signature gemstone market with significant development potential through support to ASM. Achieving such an aim will require a complex, multi-faceted approach to invest in technical skills and incentivizing the development of a regional gemstone cutting and processing industry.

In the case of gold processing, measures should be taken to minimise, manage, and mitigate risks from mercury misuse, including gender-sensitive approaches. These include, suitable technical responses to minimise mercury use and improve its handling and management, including sensitisation campaigns, coupled with the introduction of retorts, more efficient gravity separation methods and waste containment systems.

Formalisation should be advanced in both gold and gemstones ASM supply chains. Strategies should be integrated with legalisation, and targeted capacity building should be provided to the sector’s diverse stakeholders.

The full report on Kenya, including recommendations and detailed site assessments (refer to the annexes) can be found in full online here.

Additional case study reports from Uganda and Rwanda are available here.

Full Citation:  Barreto, M.L., Schein, P., Hinton, JJ., Hruschka, F. (2018). ‘Understanding the Economic Contribution of Small-scale Mining in East Africa’. Somerset, UK:  Pact UK. Project funded by the UK Department for International Development (DFID) through the Research for Evidence Division (RED).