5. A critical look at corporate social responsibility (CSR) in Kenya's mining section

Kenya has an embryonic mining industry. Indeed, of the 70 important minerals listed by the British Geological Survey (BGS), Kenya is only listed in six of these. However, Kenya is currently revamping its mining industry and with the discovery of titanium in early 2000 (comprising 14% of the world's total), of gold deposits in Trans Mara in 2011 (reserves estimated to be between 40,000 ounces and 60,000 ounces), of oil in the northern parts of Kenya, and of coal in the Eastern and Coastal part of Kenya, of gas in the coastal part of Kenya, and having the largest deposits of gemstones in the world, the country will soon be in the big league when it comes to mining. The need for CSR in the mining sector in response to this emerging fortune and to the troubles that usually accompany such mining concerns is, therefore, necessary if the further conflict is to be avoided.

whereby companies integrate social and environmental concerns in their business operations and in their transaction with stakeholders on a voluntary basis ([33], p. 7). However, CSR activities in the mining industry have long had a questionable reputation for social responsibility, especially in developing countries ([34], p. 275). This is why, as illustrated in Carroll's CSR pyramid, companies view CSR activities as trailing in importance when compared with economic, legal and ethical responsibilities [35]. CSR programs have not been without their dissenters who offer counter-narratives about the effectiveness of the programs. For one, it is reported that local communities are usually discontented by the manner in which extractive companies design and carry out their programs as they are fond of employing the "top down" approach, which often alienates the local communities from these programs—this is despite enjoying the relative benefits that come with such programs [34]. Others point to the often observed disconnect between the social provisioning provided and the wealth that is mined. This imbalance often agitates local communities leading to instances of conflict [36]. Others point out that in some cases, the array of social provisioning pointed out in company newsletters are never translated on the ground [37]. It is because of the various negative effects that accompany mining activities, and the fact that companies benefit hugely from these mining projects, that local communities have developed a natural tendency to expect tangible projects and services from mine developers, as they (the mining companies) are the originators of these problems [25]. Many organizations are thus adopting corporate social responsibility (CSR) to enhance their competitiveness and gain company acceptance ([38], p. 33). CSR is largely used as a form of corporate self-regulation integrated into a business model. Some scholars have

argued that profits, rather than community development, is what drives capital.

in bridging the gap between company profits and community development.

profit (Atuguba and Dowuona-Hammond [39], p. 17).

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70 Social Responsibility

Most corporate entities are formed to undertake business activities with a view to making profit. In view of this, business enterprises have been criticized as being driven by motives that militate against concern for the common good. So it is sometimes argued that if business is to be allowed to get on with the production of wealth, it must be made, by a combination of law and public pressure, to discharge responsibilities that are additional to the maximization of

In essence, their argument is that though CSR is a voluntary undertaking, laws are still needed to ensure that firms do implement programs that benefit the local communities. For the mining industry, social responsibility may have direct implications for bottom line profits as evidence shows that sincere, convivial relations between mining companies and local communities play a crucial role in the economic and competitive strength of a mine [40]. CSR is, therefore, critical

5. A critical look at corporate social responsibility (CSR) in Kenya's mining

Kenya has an embryonic mining industry. Indeed, of the 70 important minerals listed by the British Geological Survey (BGS), Kenya is only listed in six of these. However, Kenya is currently revamping its mining industry and with the discovery of titanium in early 2000 (comprising 14% of the world's total), of gold deposits in Trans Mara in 2011 (reserves As evident in most countries, more and more business enterprises are now engaging in CSR activities. Business firms are now integrating business with social acceptability so as to maximize profits. In Kenya, manufacturing firms, banking firms, airlines, government parastatals<sup>2</sup> among others, are now engaging in CSR activities [38, 41–45]. The general conclusion that the various researchers have come up with is that these business firms engage in CSR chiefly to obtain the "social license" to operate—this will, in turn, assist them to generate more profits. In keeping with Carroll's CSR pyramid, economic benefits are what interests most corporations. Legal responsibilities come next, followed by ethical responsibilities and tailing companies concerns are philanthropic responsibilities [46]. CSR and the matter of corporate citizenship in the mining industry are important for a sustainable environment, are fast becoming everyday buzz words but lacking serious commitment of companies and governments. Despite this growing importance, there is very little research being done on corporate citizenship in Africa ([35], p. 1). This is even more evident in the mining sector in Africa. In Kenya, for instance, as highlighted above, most researches carried out have focused more on business enterprises very few studies have been carried out on mining firms [47, 48].

CSR activities of Tata Chemicals Magadi (TCMLL—formerly Magadi Soda Company) in Magadi division, Kenya is among the few that have been carried out [48]. Magadi Soda Company (MSC) started its operations in Kenya in 1911, in what some have viewed as underhand tactics by the colonial government which led to the local Maasai community to lose its ancestral land [32]. TCMLL "remains the dominant social welfare provider in the region and the community has benefited from the company's benevolence through donations and philanthropy" ([48], p. 75). Others have however argued against this characterization, instead arguing that the Maasai have benefitted little from this mining concern. They point out that among the concerns of the Maasai are the continued denial of compensating them for the seized land, the environmental degradation that has taken place and the continued refusal to pay the community mining royalties as had previously been promised [32]. When approached in 2005 and asked for its response to Maasai demands for a share of royalties, the company is reported to have ironically replied that:

"We are not faced with a demand for a share of the royalties as such, there is no claim…. There are a number of people from time to time who present themselves as representing the Maasai on this issue, but they don't."…. "these people (in reference now to those who had made representations to the UN Permanent Forum on Indigenous People on the matter of compensation and payment of royalties) are not part of the Magadi community and they don't" ([32], p. 155).

<sup>2</sup> These are government owned companies, boards or organizations which help the government to run some essential functions.

The downside with Muthuri's article (see [47]) is that although it sufficiently details the process of participation within TCMLL CSR program (as in the author's words, the company "goes beyond the 'affect–affected' binominal defining the management of corporate–stakeholder relationships and demonstrating how a company purposefully facilitates participatory network governance to tackle complex social issues in the local communities in which they operate") it does not include community sentiments over these CSR activities ([48], p. 83). Neither does it enumerate the activities mounted by TCMLL and indicate the degree of participation within the various programs. The various CSR activities can nonetheless be found on Magadi Soda Foundation's Website<sup>3</sup> . One notes from the website that the company has programs in health, education, environment, and youth empowerment. With regard to health, the company boasts of having constructed a 60-bed capacity hospital that is open to the local community and offers both outpatients and inpatients services. Through the Foundation, the company further subsidizes healthcare in the hospital to the local community for up to 70% of the cost of treatment. However, based on the arguments on the stench emanating from the plant and the health consequences that come with this, coupled with the contamination of and scarcity of the water systems as affected by the mining operations, the benefits of these CSR activities against the health hazard promoted by the project are unclear. The webpage further informs that the Foundation has assisted in the construction/renovation of Entasopia and Oloika Health Centers.

and awareness and coordinate other stakeholders in environmental management. Its activities include public awareness campaigns, outreach and education, tree planting, clean-up campaigns, creating awareness of environmental challenges and solutions, promotion of best practices, and dissemination of environmental messages through mass and folk media. The impact of this against the degradation taking place as affected by the mining activity is not

Mining Conflicts and Corporate Social Responsibility in Kenya's Nascent Mining Industry: A Call…

http://dx.doi.org/10.5772/intechopen.77373

On youth empowerment, the Foundation lists the cultural challenges (the preference of a large number of children and shunning of education) that one is faced with by developing change in the community, indicating that its program envisages to empower the youth into realizing some business opportunities and practice projects in different places of the division to reduce

On its part, Base Titanium, which is mining Titanium in Kenya's coast in Kwale, indicates that it is involved in the following CSR activities; Community infrastructure, Community projects, and livelihood program, community health and provision of academic scholarships<sup>4</sup>

community infrastructure, the company lists the following as its activities (as guided by the agreement entered into in the lease agreement): construction of two schools, a dispensary, a social hall and two boreholes at the Mrima Bwiti Host Resettlement Site, and two schools, a borehole and health center at Magaoni, which have been completed. Since the area has several existing health facilities, in agreement with county health authorities, community consultation committees and the Commissioner of Mines, the company has provided a four-wheel drive ambulance to Msambweni Referral Hospital as an alternative to another dispensary in the area. Other activities include assisting the county government with the construction of early childhood development centers, agricultural training facilities, health facilities and water infrastructure; refurbishment of existing schools in Kwale and Mombasa counties to create a better learning environment; upgrading work to improve service delivery at the Kenya Medical Training College at Msambweni; and improving educational facilities for special needs children in both areas. An advanced maternity wing has also been constructed, equipped with specialized surgical theatres. This was done to obviate the need to transfer problem births across the Likoni Ferry (that connects Mombasa Island to the south coast mainland) to Coast General Hospital in Mombasa. The maternity wing constructed by Base Titanium at Likoni Sub-county Hospital was completed in 2017 and includes provision of 18 maternity beds. Under this program, the need for a blood bank facility in the County was identified to address the problem of acquiring blood supplies from Mombasa, which were often delayed, which

. Under

73

poverty. The nuts and bolts of how this will be achieved are, however, not mentioned.

then adversely impacted on emergency cases. Progress on this front is ongoing.

See http://basetitanium.com/community/community-programmes accessed 27/3/18.

Under the community and livelihood program, the company has mounted agricultural support programs (on potato, cotton, sorghum, and poultry keeping), and animal husbandry programs. Other projects include: providing life skills training through sport supporting existing community projects such as Village Savings and Loans Association ("VSLA") schemes for volunteer community health workers and enterprise development for youth and women's

clear.

groups.

4

On the education front, the company boasts of having supported many primary schools in the area in terms of construction of classes, provision of learning and teaching materials and installation of solar systems, among others. With regard to secondary schools, the Foundation lists the construction of a Boarding Secondary School in Magadi division as one of its achievements. This school opened its doors in 2005 and currently has over 400 students. It further states that over 20 students benefit from bursaries annually and are supported for 4 years. On tertiary education, the Foundation provides six scholarships for tertiary/university education for students from the entire wider Kajiado District. However, the amounts spent on this (education program) activity is not stated, and as such, one is left to wonder whether payment of royalties to community members would not realize more benefits.

With regard to the environment, the Foundation ran a program which lists the following objectives: (1) improved agro forestry by planting trees along river banks, homes, and southern part of the lake; (2) to improve environmental conservation and promote the economic livelihood of the community through wildlife based and other eco-tourism enterprises by 2019; (3) to mainstream environmental, climate and mineral concerns into overall planning, implementation, and monitoring of county government and partners, so as to reduce environmental degradation and strengthen the role of environment and natural resources in reducing poverty; (4) to raise real awareness of the importance of environmental matters within national and local political leaders; stressing social and economic importance as well as ecological consequences; and (5) to enhance environmental education, public participation

<sup>3</sup> See http://www.magadisodafoundation.org/ - accessed 27/3/18.

and awareness and coordinate other stakeholders in environmental management. Its activities include public awareness campaigns, outreach and education, tree planting, clean-up campaigns, creating awareness of environmental challenges and solutions, promotion of best practices, and dissemination of environmental messages through mass and folk media. The impact of this against the degradation taking place as affected by the mining activity is not clear.

The downside with Muthuri's article (see [47]) is that although it sufficiently details the process of participation within TCMLL CSR program (as in the author's words, the company "goes beyond the 'affect–affected' binominal defining the management of corporate–stakeholder relationships and demonstrating how a company purposefully facilitates participatory network governance to tackle complex social issues in the local communities in which they operate") it does not include community sentiments over these CSR activities ([48], p. 83). Neither does it enumerate the activities mounted by TCMLL and indicate the degree of participation within the various programs. The various CSR activities can nonetheless be

has programs in health, education, environment, and youth empowerment. With regard to health, the company boasts of having constructed a 60-bed capacity hospital that is open to the local community and offers both outpatients and inpatients services. Through the Foundation, the company further subsidizes healthcare in the hospital to the local community for up to 70% of the cost of treatment. However, based on the arguments on the stench emanating from the plant and the health consequences that come with this, coupled with the contamination of and scarcity of the water systems as affected by the mining operations, the benefits of these CSR activities against the health hazard promoted by the project are unclear. The webpage further informs that the Foundation has assisted in the construction/renovation of Entasopia and

On the education front, the company boasts of having supported many primary schools in the area in terms of construction of classes, provision of learning and teaching materials and installation of solar systems, among others. With regard to secondary schools, the Foundation lists the construction of a Boarding Secondary School in Magadi division as one of its achievements. This school opened its doors in 2005 and currently has over 400 students. It further states that over 20 students benefit from bursaries annually and are supported for 4 years. On tertiary education, the Foundation provides six scholarships for tertiary/university education for students from the entire wider Kajiado District. However, the amounts spent on this (education program) activity is not stated, and as such, one is left to wonder whether payment

With regard to the environment, the Foundation ran a program which lists the following objectives: (1) improved agro forestry by planting trees along river banks, homes, and southern part of the lake; (2) to improve environmental conservation and promote the economic livelihood of the community through wildlife based and other eco-tourism enterprises by 2019; (3) to mainstream environmental, climate and mineral concerns into overall planning, implementation, and monitoring of county government and partners, so as to reduce environmental degradation and strengthen the role of environment and natural resources in reducing poverty; (4) to raise real awareness of the importance of environmental matters within national and local political leaders; stressing social and economic importance as well as ecological consequences; and (5) to enhance environmental education, public participation

of royalties to community members would not realize more benefits.

See http://www.magadisodafoundation.org/ - accessed 27/3/18.

. One notes from the website that the company

found on Magadi Soda Foundation's Website<sup>3</sup>

Oloika Health Centers.

72 Social Responsibility

3

On youth empowerment, the Foundation lists the cultural challenges (the preference of a large number of children and shunning of education) that one is faced with by developing change in the community, indicating that its program envisages to empower the youth into realizing some business opportunities and practice projects in different places of the division to reduce poverty. The nuts and bolts of how this will be achieved are, however, not mentioned.

On its part, Base Titanium, which is mining Titanium in Kenya's coast in Kwale, indicates that it is involved in the following CSR activities; Community infrastructure, Community projects, and livelihood program, community health and provision of academic scholarships<sup>4</sup> . Under community infrastructure, the company lists the following as its activities (as guided by the agreement entered into in the lease agreement): construction of two schools, a dispensary, a social hall and two boreholes at the Mrima Bwiti Host Resettlement Site, and two schools, a borehole and health center at Magaoni, which have been completed. Since the area has several existing health facilities, in agreement with county health authorities, community consultation committees and the Commissioner of Mines, the company has provided a four-wheel drive ambulance to Msambweni Referral Hospital as an alternative to another dispensary in the area. Other activities include assisting the county government with the construction of early childhood development centers, agricultural training facilities, health facilities and water infrastructure; refurbishment of existing schools in Kwale and Mombasa counties to create a better learning environment; upgrading work to improve service delivery at the Kenya Medical Training College at Msambweni; and improving educational facilities for special needs children in both areas. An advanced maternity wing has also been constructed, equipped with specialized surgical theatres. This was done to obviate the need to transfer problem births across the Likoni Ferry (that connects Mombasa Island to the south coast mainland) to Coast General Hospital in Mombasa. The maternity wing constructed by Base Titanium at Likoni Sub-county Hospital was completed in 2017 and includes provision of 18 maternity beds. Under this program, the need for a blood bank facility in the County was identified to address the problem of acquiring blood supplies from Mombasa, which were often delayed, which then adversely impacted on emergency cases. Progress on this front is ongoing.

Under the community and livelihood program, the company has mounted agricultural support programs (on potato, cotton, sorghum, and poultry keeping), and animal husbandry programs. Other projects include: providing life skills training through sport supporting existing community projects such as Village Savings and Loans Association ("VSLA") schemes for volunteer community health workers and enterprise development for youth and women's groups.

<sup>4</sup> See http://basetitanium.com/community/community-programmes accessed 27/3/18.

With regard to the community health program, the company has rolled out a program to assist in the expansion of the Kwale and Mombasa Counties Health Departments' Community Strategy Program by providing funding for training and ongoing logistical support. On hospital equipment, long-term plans to upgrade the Msambweni Referral Hospital to a level that will be able to handle almost all emergency and routine medical procedures are underway. The Magaoni Health Center has also been constructed by Base Resources. Base Resources has provided equipment for this facility and has constructed a dispensary at Bwiti in 2012. Community health workers have also been empowered to deal with the emerging bedbug infestation through training in fumigation procedures and provision of fumigation equipment. Under the Prevention of Mother to Child Transmission ("PMTCT") project, the company had by September 2017 enrolled close to 800 HIV positive pregnant mothers into the care, with further effort envisaged to reach 11,000 HIV negative pregnant mothers with preventive messages.

mining sector. It is perhaps because of this that CSR activities in the mining industry have had a questionable reputation for social responsibility ([34], p. 275). The voluntary nature of CSR makes many extractive companies in the mining sector opt to do just enough to appease the host government that it is doing something along these lines. Some scholars have termed this as the practice of obtaining a "social license" to operate. In Africa, South Africa stands out as the only country with a large extractive industry to have an explicit law that regulates CSR activities. This is the Mineral and Petroleum Resource Development Act (MPRDA) backed by the Broad-Based Socio-Economic Charter for the Mining Industry (Mining Charter). These two efforts call upon mining companies to invest in social development and to diversify ownership to historically disadvantaged groups [50]. On the backdrop of colonialism and apartheid, the South African government enacted the law so that CSR can be used as a development tool to

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75

address social justice (especially past injustices) and community development [51].

has been identified as one of the factors that promote conflict in this sector [36].

Available: http://www.mining.go.ke/images/PUBLISHED\_MINING\_POLICY\_-\_Parliament\_final\_.pdf - accessed 17/4/

Available: http://kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/MiningAct29of1940.pdf - accessed 17/4/2018.

6

2018. 7

The MPRDA specify the objectives and processes for the Social and Labor Plans (SLPs) that must accompany every mining application. These guidelines form the main regulatory force driving CSR in the South African mining industry. The 2004 Mining Charter demands on the other hand, among other things, 26% ownership of mines by historical disadvantaged South Africans within 10 years. It also enacted a scorecard to monitor company compliance with their SLP requirements. Previous studies have found that existence of regulation has increased the formalization and strategic nature of CSR in South Africa [52]. The studies have also noted that the existence of regulation has led to increased reporting on CSR and the generally increased commitment to CSR. Without a doubt, therefore, regulation of CSR is a good thing. Other countries also appear to want to follow suit. Kenya is such one country. Previously, mining contributed only 1% to Kenya's Gross Domestic Product (GDP) [53, 54]. The recent discovery of titanium in Kwale, gold deposits in Trans Mara, coal in Eastern province of Kenya, and oil deposits in the Turkana basin in Northern Kenya has now placed Kenya among the great mineral nations in the world. The 2016 Mining Policy6 and the new 2016 Mining Act (that replaced the archaic 1940 mining act inherited from the colonial government) seeks to address past and present concerns over problems associated with mining extraction. The mining policy sets out the aspirations of the Kenyan government with regard to mineral development in Kenya. Much of the objectives in mining policy have been translated into law (the enactment of the 2016 Mining Act<sup>7</sup> is a case in point). In the said Act, regulations resolved the contentious issue of royalty as, under Section 183 (5) royalties are now payable and are distributed as follows: 70% to the National Government; 20% to the County Government; and 10% to the community where the mining operations occur. The new act retained the government rights over minerals and the forceful taking of community land for mineral development. With this proviso retained, it will not be surprising if conflicts over land rights continue, as this

Under the scholarship program, base resources have established a scholarship program to cater for bright but needy students. By December 2017, the company boasts of having supported over 1050 needy local students from Kwale County and Likoni Sub-county who are studying at a variety of institutions across the country. Since 2013 the company has invested 164 million shillings (US\$1.6 million) in providing scholarships. One other community training initiative is in the area of Maritime Course Training. This is promoted as a community initiative geared toward improving livelihoods near the company's ship loading facility at Likoni. Toward this end, base resources donated a fishing boat and fishing equipment to the Likoni Beach Management Unit ("BMU"). It has also facilitated attendance of 50 members of the BMU at the Dar es Salaam Maritime Institute in Tanzania to receive training in fishing and marine safety. The company's investment in this initiative is said to total 14 million shillings (US\$136,000).

On the initial CSR programs pursued by Tiomin (K),5 a study found that the various CSR activities fall below the expectations of the local communities, especially when these were compared with the assets they had lost to the project [47]. The now increased CSR activities seem to suggest that lessons from the past have been learn. What remain unclear are the community's sentiments toward these expanded programs. Research of this is necessary as it has been found that at times what is on paper is actually not being substantiated on the ground [36, 37]. This then begs the question: should CSR be legally regulated? The following section examines this conundrum.
