Paper short abstract:

Using a political settlements approach, this paper finds that Kenya's virulent form of competitive-clientelism is undermining the commitment and capacity of ruling elites to govern the country's newfound oil and gas reserves in the national interest

Paper long abstract:

This paper deploys a political settlements approach to examine whether Kenya's ruling elites are demonstrating commitment and capacity to govern the country's newfound oil and gas reserves in the national interest. Drawing on key informant interviews and documentary evidence, the paper finds that all of the state's key functions within the sector are conditioned - and, indeed, generally undermined - by Kenya's virulent competitive-clientelism, which incentivises short-term and predatory forms of governance and precludes against serious investments in state capacity. The negotiation of production sharing contracts, for example, is motivated less by a desire to further the national interest and more by political and ethnic considerations as well as a desire to secure payoffs for particular individuals and factions. So, too, does Kenya's political settlement compromise the state's ability to monitor and discipline industry players, as the only companies that are sanctioned or have licenses withdrawn are those that are unable to maintain their connections to ruling elites within Kenya's highly-fluid political context. Finally, the paper finds that the state's ability to undertake complex negotiations with oil companies on commercial terms for projects that are entering the development stage is also being severely hampered by the country's political settlement, as ruling coalitions in Kenya suffer from high degrees of ethnic fragmentation. Ministries and agencies are the fiefdoms of particular ethnic factions and there is a lack of cooperation between them, resulting in an environment in which it is difficult to coordinate around large-scale projects such as oil.