Comparing Environmental Financial Guarantee Schemes in Kenya and South Africa

Abstract

Kenya and South Africa have enacted some laws that inculcate economic incentives schemes as key elements of their environmental regulatory terrain. While Kenya has advanced the use of Environmental Performance Deposits (EPDBs), South Africa has adopted the use of the Financial Provisioning Regulations, applied specifically for the upstream mining sector. This article reviews the use of financial assurance schemes in environmental management and their specific application to the upstream mining sectors in the two countries. The data used in the analysis is from literature review, key informant interviews, interview schedules, and focus group discussions. Results indicate that while the use of financial provisioning is a well-established practice in South Africa, in Kenya only one company has deposited funds to the environmental regulator as a security for good environmental practices. A comparative analysis of the regulatory framing for financial assurance instruments in Kenya and South Africa demonstrates some similarities in terms of requirement for public participation, requirement for periodic review of the bonds, use of the bonds for environmental rehabilitation; and some differences such as requirement for use of cash and/or financial instruments, how to treat the accrued interest from the deposited funds, and how the deposit bond amounts are set. Largely, both countries acknowledge the importance of economic incentives in their environmental management frameworks. The article recommends strengthened regional cooperation to enhance the application of financial assurance in the law for effective environmental management in Africa.