Working paper 140
This paper explores how Kenya’s political settlement has shaped the governance of its emerging oil sector. Specifically, it examines three aspects of oil governance: (1) institutional arrangements within the sector; (2) the extent to which bureaucratic ‘pockets of effectiveness’ are present; (3) whether Kenya is striking deals with oil companies that are in the national interest. With regards to the first aspect, the paper finds that external actors have pressured Kenya to adopt best-practice institutions that separate the state’s roles. However, the implementation of these institutional arrangements has been hobbled by intra-elite fighting over rents, sounding a warning about promoting reforms that are not mapped onto domestic political realities. In terms of the presence of, or potential for, pockets of effectiveness, the paper finds that Kenya’s political settlement undermines incentives to invest in state capacity. The oil technocracy offers too lucrative a stream of rents, even before oil has started to flow, for it to be left in the hands of politically empowered and autonomous bureaucrats, given the necessities of generating political financing and ensuring factional balancing within a competitive and fragmented settlement. Finally, the paper finds that the ability – or inclination – of the state to negotiate sound deals with oil companies is undermined by Kenya’s political settlement. Deals are often motivated less by the national interest and more by political considerations and a desire to benefit particular individuals and factions. Concluding, the paper finds little evidence that Kenya’s ruling elites are demonstrating the commitment or capacity to manage the country’s oil resources in developmental ways.