The National Post is Canada’s second largest national paper.
U.S. President Barack Obama’s visit to Kenya, which begins on Friday, is an event that country’s government has awaited for years.
With the world’s attention focused on Kenya, the birthplace of Obama’s father, the East African nation has an opportunity to show it welcomes foreign investment and does not tolerate corruption. As such, one of the last topics the government wants anyone to bring up is Canadian resource companies that are fighting it in court.
Two small companies, Vanoil Energy Ltd. and Pacific Wildcat Resources Corp., have begun international arbitration cases against Kenya, claiming they lost access to their properties under very peculiar circumstances. Vanoil is seeking US$150 million (and is threatening additional litigation), while Pacific Wildcat wants more than US$2 billion, according to a report.
Interviews with executives at the two companies paint a troublesome portrait of Kenyan government officials willing to push out companies that own concessions. Kenya has traditionally been viewed as one of Africa’s most attractive places to invest, but political risk, along with a tenuous security situation, are harming that perception.
In the Fraser Institute’s latest rankings of mining jurisdictions, Kenya was ranked the worst place to invest in Africa, and third worst in the world.
Clare Allenson, an Africa analyst at the Eurasia Group, said political corruption has been a significant challenge in Kenya’s resource sector (though not in other industries). “Particularly the mining sector has been bogged down by corruption,” she said.
President Uhuru Kenyatta has taken the issue seriously. Last March, he suspended five ministers over corruption, including energy minister Davis Chirchir. He has tried to make the anti-corruption crackdown one of his priorities.
But the experiences of Vanoil and Pacific Wildcat suggest there may be more work to do.
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