History has been made with the conviction and sacking of two high level members of the Kenyan judiciary. Two High Court judges, Justice Tom Mbaluto and Justice Vitalis Juma were found guilty of the charges of corruption, unethical behavior and recommended for relieving of duties by the president. The findings of 'guilty as charged' against the two were the subject of recommendations of the tribunals constituted investigate the judges which have since been handed to the President for action.
Section 62 of the Constitution
The tribunals had been established pursuant to section 62 of the constitution of Kenya. Judges of the High Court and Court of Appeal enjoy a security of tenure. This means that they cannot be relieved of office, even where there are weighty allegations of abuse of office or incapacity like a normal civil servant. This is intended to protect the independence of the judiciary. However, over time, it had been a sword and shield for corrupt judges out to block efforts to serve them justice.
Thus, to remove a judge, the president must first constitute a tribunal to investigate the alleged conduct of the judge. It is only on recommendations of such tribunal can the president proceed to sack the judge.
Priests of temple of justice
Judges have elsewhere been likened with priests of the holy temple of justice with the intention of giving expression to the standard expected of them. Given the role of the judiciary as the arbiter of disputes between warring parties and sole interpretor of the law in disputes, demanding integrity of the judges is not a tall order. Or is it?
Judges must be free from any association with corruption. They must be beyond bias, whether induced by favours given or merely likely. That way, justice can succeed in not only being done but being seen to be done as the old mantra goes.
Justice Mbaluto and Juma guilty of corruption
That is why the sacking of Mr Justice Mbaluto and Mr Justice Vitalis Juma is laudable. The two former judges the High Court of Kenya were found to have been involved in corruption and unethical behaviour. These were the findings of tribunals established in 2003 to investigate them after the radical surgery of the judiciary following Justice Ringera Committee recommendations on corruption the judiciary.
In justice Juma's case, the finding of the tribunal probing his conduct led by retired Chief Justice A.M Cockar the verdict was "The complaints made in the proved allegations consist of corruption, unethical practices and absence of integrity ... In our view, the judge is not fit to be a judge of the High Court of Kenya."(Quited as reported in Daily Nation 03/05/08).Justice Juma was found guilty of extorting bribes of a total of Kshs 225,000 to rule in favour of litigants.
Justice Mbaluto was accused of, inter alia, receiving Kshs 50,000 and a paltry bag of millet to rule in favour of a litigant. The tribunal investigating him led by his hitherto collegue Lady Justice Lesiit said that the judge exhibited bias in the case he was accused of taking inducements. The former judge was also found to have advanced his personal interests with a litigant having entertained him in a named club.
Another judge exonerated
However, the tribunal investigating the suspended High Court Judge Msagha Mbogholi led by his Lordship Cockar found that none of the 10 allegations leveled against him was proved and thus exonerated him. The learned judge was recommended for reinstatement to the bench.
It will be remembered that Justices Mbaluto, Juma and Mbogholi were suspended alongside 2o other judges and 73 magistrates on October 14, 2003. His Lordship Mbogholi joins the ranks of Appeal Judge Philip Waki, Daniel Aganyanya and High Court Judge Roselyn Nambuye who have been cleared of corruption and reinstated to the judiciary.
However, most of the judges implicated then opted to retire rather than face the tribunal. Mr Justice Juma has pointed out that the President ironically handed letters of commendation thanking those judges for exemplary service during their tenure in judiciary. The point the contemned judge is driving home is the same one that Theodore Roosevelt made long ago: There should be no one who is above the law or below it!
Need for a full time tribunal
One can only hope that the guilty finding against the two judges will relay the right message to our judges: That corruption does not pay and in their case, it is treasonous abuse of trust. However, intermittent tribunals of judicial colleagues is not what will purge our judiciary of corruption. There is need for a standing judicial disciplinary body dedicated to probing accusations against judges as they arise. The disciplinary body should also be de-linked with the executive as otherwise it will undermine the independence of the judiciary.
The body should also be made to expedite hearings to avoid a scenario where Kenyans have to wait 5 years to know the fate of allegations against a judge as is the present case.
Magistrates are the black sheep
That we never got to hear the fate of the allegations against magistrates tells use that justice in the justice department is skewed in favour of the senior members of the bench. Magistrates done enjoy security of tenure. They can be removed arbitrarily or without elaborate procedure. This goes against the right for those contemned to be afforded a fair hearing.
Saturday 3 May 2008
PATERNITY LEAVE UNDER EMPLOYMENT ACT OF KENYA
Introduction
The provisions of the Employment Act on Paternity leave are evidently not clear in that they do not state when the leave is taken and on what basis. In the Act, the minister of labour is vested with the powers to make rules and regulations on any matter regulated by the Act. Matters touching on paternity leave are no exception. However, so far no rules or regulations have been passed.
The Employment Act also grants employer the indulgence contract with employees or their representatives on rights and duties of employee than otherwise provided for in the Act. The only condition is that for such the contract to stand, if inconsistent with the Act, it must be more favourable to the employee than the Acts provisions on the matter.
Also, the fact that the provisions on paternity leave are included on the provisions of maternity leave may be a pointer to their interpretation in case of ambiguity. If anything, if the law is strict on the female employee, the one expecting the baby, it is unreasonable to even think that the Parliament intended that it be lenient on male employees relying on the same expectancy.
Here, we consider the 17 frequently asked questions on right to paternity leave.
1. What are the rights to paternity leave?
The provisions on paternity leave under the Employment Act allow an eligible employee to take fully paid paternity leave.
The provisions of the Employment Act on Paternity leave are evidently not clear in that they do not state when the leave is to be taken and on what basis. The relevant section reads:
“A male employer (sic) shall be entitled to two weeks paternity leave with full pay.
The bit about ‘employer’ is a clerical error and clearly it was intended to state ‘male employees’.
2. Who qualifies for paternity leave?
Answer: A male full ‘employee’
To qualify for paternity leave, a person must be a male person and an employee. That is to say, ‘be employed for a salary or wages’, as employees are defined in the Act. However, a casual employee is not included as the Act seems to define an ‘employee’ and ‘casual employee’ separately. In our opinion, the right to paternity leave is available to full employees only and does not cover casual employees.
Logically, paternity and by extension a leave based on claims of paternity can only accrue to:
• the biological father of a baby
• husband or partner to the baby’s mother.
We are of the opinion that for the purpose, a partner would be someone who lives with the mother of the baby in an enduring family relationship but is not an immediate relative. This seems to us necessary because it will be hard for an employee to prove that he is the biological father.
3. Which employees are excluded from paternity leave?
Answer: Casual employees.
As opined above, the definition of ‘employee’ in the Employment Act does not include a ‘casual employee’. Given that only a ‘male employee’ is entitled to paternity right ‘casuals’ are thus excluded.
4. Is an employee entitled to time off to attend antenatal care appointments?
Under the statutory right to paternity leave, male employees are not entitled to time off to accompany their partner at antenatal appointments (although pregnant employees would as a matter of reasonability have the right to time off).
5. Can an employer create stipulation on paternity leave?
Answer: Yes. This also goes to answer, most especially your question three.
The Act allows the employer and employee to contract on terms of employment provided the terms between them are more favourable to the employee than the terms provided in the Act. In the present case, such contract would be justified in that it would aim to give effect to the right of paternity leave which is otherwise ambiguous.
However, employers cannot use the provision to contract employees out of their right to paternity leave as the law is couched in mandatory terms. Thus the answer to the question is that the employer can have its own paternity leave provisions on the contract of employment provided they do not infringe the right or paternity leave as provided for under the Act. If it infringes, the employee is entitled to choose the right under the scheme or the statutory one.
Thus, although not expressly provided for in the Act, the employer may restrict the right to paternity leave. But such restriction must be favourable to the employee and only requiring what a reasonable man would infer from the law otherwise they would amount to illegal contract and doomed to unenforceability.
6. How much paternity leave can an employee take?
Eligible employees are entitled to take either two consecutive weeks’ paternity leave. It can not be taken as odd days or as two separate weeks.
Employees can take only one period of leave even if more than one baby is born, i.e. twins or triplets, as the result of the same pregnancy.
7. When can an employee start his leave?
This is not provided for in the Act. However, a female employee is required to give seven or any other reasonable notice before proceeding to the leave. We find no reason why the male employee should not also be so required. But we think the employer and the employee can agree that the same be taken latter or earlier.
However, for prudence sake, paternity leave should, as far as possible, be restricted to after the given birth. If anything, that is the time when documentary evidence of fatherhood is forthcoming e.g. birth notification and baby cards.
8. Will an employee qualify for leave if his baby is stillborn or dies following birth?
The law does not stipulate on this. We opine that a qualifying employee should be entitled to paid paternity leave if his baby is stillborn after a reasonable time of pregnancy. This is because such births are usually traumatic to the couple and the employee may need, just as is the case in a live birth, time to take care of the mother.
However, not all still births can qualify. Some jurisdictions have put the period at twenty-four weeks of pregnancy for the male partner to qualify in case of a still birth. In our case, are of the opinion that reasonable time would do-that is such time as reasonable depending on the circumstances of the case.
Further, if the baby is born alive at any point in the pregnancy but dies later, it seems the employee should be entitled to paid paternity leave in the usual way.
9. Can the employer restrict the leave to be taken within a certain period?
The law does not limit the time on which the leave may start. However, we are of the opinion that the employer may provide for reasonable time in which it may be taken depending on the prevailing circumstances.
10. When must an employee tell his employer that he is going to take paternity leave?
No restrictions on this. But it seems the employer may within the law impose a reasonable restriction in the interest of smooth flow of its business i.e. as soon as is reasonably practicable after birth depending on the prevailing circumstances.
11. What does an employee have to inform the employer to be entitled to paternity leave under the Act?
If the requirements on maternity leave are anything to go by, a male employee wishing to exercise its right to paternity leave should if required by the employer, produce a certificate of the medical condition of his wife or partner and prove that he is the father of the child and/or the partner or husband of the mother.
12. What protection is there against detriment for taking paternity leave?
An employee is protected against being subjected to detriment by any act or deliberate failure to act by their employer because he:
• took paternity leave or
• sought to take paternity leave
Detriment can cover a wide range of forms of unfair treatment, such as denial of promotion, facilities or training opportunities which the employer would otherwise have offered or made available.
Employees who suffer unfair treatment at work for the above reasons may make a complaint to the authorities.
13. Are the 14 days inclusive or exclusive of public or weekly holidays or not?
Answer: Inclusive
In respect of annual leave, the Act is specific that the days that shall count are ‘working days’. However, in the provision on paternity leave, the law talks of ‘two weeks paternity leave’. Given that it does not specify that the two weeks compose of working days, the literal meaning is that the leave days are inclusive of weekly holidays and public holidays, i.e., calendar weeks.
16. Does the employer have the right to deny such paternity leave if requisitioned latter than time of partner’s delivery?
Answer: Yes.
However, it seems the employer must reserve the right as to the requirement with regard to notification of birth. Bust the same should not be unreasonable or unduly unfavourable to the rights of the employee.
17. Can the employee insist on claiming wages in monetary terms instead of the paternity leave?
Answer: No.
It would seem this touches on why the leave is granted in the first place. The father is given the leave to be with the new-born and take care of his responsibilities as a father. However, the law merely states that the employee is entitled and not that it shall go for the leave.
In my opinion, the employer cannot contract the employee to accept cash in place of the absence. The same would likely fail to pass the test of being favourable to the employee. For example, it may amount to acting against the interests of the employee.
However, if the employee opts for cash, and the employer is agreeable, we see no reason why the cash will not serve the purpose. But the employee cannot insist on the cash i.e. force the employer to agree to pay cash and forfeit the leave. It is a matter of discretion of the employer and if it wants the employee to proceed on leave, the employee has no choice. Just same way the employer cannot compel the employee to forfeit the leave for cash when he wants to proceed for the same.
The provisions of the Employment Act on Paternity leave are evidently not clear in that they do not state when the leave is taken and on what basis. In the Act, the minister of labour is vested with the powers to make rules and regulations on any matter regulated by the Act. Matters touching on paternity leave are no exception. However, so far no rules or regulations have been passed.
The Employment Act also grants employer the indulgence contract with employees or their representatives on rights and duties of employee than otherwise provided for in the Act. The only condition is that for such the contract to stand, if inconsistent with the Act, it must be more favourable to the employee than the Acts provisions on the matter.
Also, the fact that the provisions on paternity leave are included on the provisions of maternity leave may be a pointer to their interpretation in case of ambiguity. If anything, if the law is strict on the female employee, the one expecting the baby, it is unreasonable to even think that the Parliament intended that it be lenient on male employees relying on the same expectancy.
Here, we consider the 17 frequently asked questions on right to paternity leave.
1. What are the rights to paternity leave?
The provisions on paternity leave under the Employment Act allow an eligible employee to take fully paid paternity leave.
The provisions of the Employment Act on Paternity leave are evidently not clear in that they do not state when the leave is to be taken and on what basis. The relevant section reads:
“A male employer (sic) shall be entitled to two weeks paternity leave with full pay.
The bit about ‘employer’ is a clerical error and clearly it was intended to state ‘male employees’.
2. Who qualifies for paternity leave?
Answer: A male full ‘employee’
To qualify for paternity leave, a person must be a male person and an employee. That is to say, ‘be employed for a salary or wages’, as employees are defined in the Act. However, a casual employee is not included as the Act seems to define an ‘employee’ and ‘casual employee’ separately. In our opinion, the right to paternity leave is available to full employees only and does not cover casual employees.
Logically, paternity and by extension a leave based on claims of paternity can only accrue to:
• the biological father of a baby
• husband or partner to the baby’s mother.
We are of the opinion that for the purpose, a partner would be someone who lives with the mother of the baby in an enduring family relationship but is not an immediate relative. This seems to us necessary because it will be hard for an employee to prove that he is the biological father.
3. Which employees are excluded from paternity leave?
Answer: Casual employees.
As opined above, the definition of ‘employee’ in the Employment Act does not include a ‘casual employee’. Given that only a ‘male employee’ is entitled to paternity right ‘casuals’ are thus excluded.
4. Is an employee entitled to time off to attend antenatal care appointments?
Under the statutory right to paternity leave, male employees are not entitled to time off to accompany their partner at antenatal appointments (although pregnant employees would as a matter of reasonability have the right to time off).
5. Can an employer create stipulation on paternity leave?
Answer: Yes. This also goes to answer, most especially your question three.
The Act allows the employer and employee to contract on terms of employment provided the terms between them are more favourable to the employee than the terms provided in the Act. In the present case, such contract would be justified in that it would aim to give effect to the right of paternity leave which is otherwise ambiguous.
However, employers cannot use the provision to contract employees out of their right to paternity leave as the law is couched in mandatory terms. Thus the answer to the question is that the employer can have its own paternity leave provisions on the contract of employment provided they do not infringe the right or paternity leave as provided for under the Act. If it infringes, the employee is entitled to choose the right under the scheme or the statutory one.
Thus, although not expressly provided for in the Act, the employer may restrict the right to paternity leave. But such restriction must be favourable to the employee and only requiring what a reasonable man would infer from the law otherwise they would amount to illegal contract and doomed to unenforceability.
6. How much paternity leave can an employee take?
Eligible employees are entitled to take either two consecutive weeks’ paternity leave. It can not be taken as odd days or as two separate weeks.
Employees can take only one period of leave even if more than one baby is born, i.e. twins or triplets, as the result of the same pregnancy.
7. When can an employee start his leave?
This is not provided for in the Act. However, a female employee is required to give seven or any other reasonable notice before proceeding to the leave. We find no reason why the male employee should not also be so required. But we think the employer and the employee can agree that the same be taken latter or earlier.
However, for prudence sake, paternity leave should, as far as possible, be restricted to after the given birth. If anything, that is the time when documentary evidence of fatherhood is forthcoming e.g. birth notification and baby cards.
8. Will an employee qualify for leave if his baby is stillborn or dies following birth?
The law does not stipulate on this. We opine that a qualifying employee should be entitled to paid paternity leave if his baby is stillborn after a reasonable time of pregnancy. This is because such births are usually traumatic to the couple and the employee may need, just as is the case in a live birth, time to take care of the mother.
However, not all still births can qualify. Some jurisdictions have put the period at twenty-four weeks of pregnancy for the male partner to qualify in case of a still birth. In our case, are of the opinion that reasonable time would do-that is such time as reasonable depending on the circumstances of the case.
Further, if the baby is born alive at any point in the pregnancy but dies later, it seems the employee should be entitled to paid paternity leave in the usual way.
9. Can the employer restrict the leave to be taken within a certain period?
The law does not limit the time on which the leave may start. However, we are of the opinion that the employer may provide for reasonable time in which it may be taken depending on the prevailing circumstances.
10. When must an employee tell his employer that he is going to take paternity leave?
No restrictions on this. But it seems the employer may within the law impose a reasonable restriction in the interest of smooth flow of its business i.e. as soon as is reasonably practicable after birth depending on the prevailing circumstances.
11. What does an employee have to inform the employer to be entitled to paternity leave under the Act?
If the requirements on maternity leave are anything to go by, a male employee wishing to exercise its right to paternity leave should if required by the employer, produce a certificate of the medical condition of his wife or partner and prove that he is the father of the child and/or the partner or husband of the mother.
12. What protection is there against detriment for taking paternity leave?
An employee is protected against being subjected to detriment by any act or deliberate failure to act by their employer because he:
• took paternity leave or
• sought to take paternity leave
Detriment can cover a wide range of forms of unfair treatment, such as denial of promotion, facilities or training opportunities which the employer would otherwise have offered or made available.
Employees who suffer unfair treatment at work for the above reasons may make a complaint to the authorities.
13. Are the 14 days inclusive or exclusive of public or weekly holidays or not?
Answer: Inclusive
In respect of annual leave, the Act is specific that the days that shall count are ‘working days’. However, in the provision on paternity leave, the law talks of ‘two weeks paternity leave’. Given that it does not specify that the two weeks compose of working days, the literal meaning is that the leave days are inclusive of weekly holidays and public holidays, i.e., calendar weeks.
16. Does the employer have the right to deny such paternity leave if requisitioned latter than time of partner’s delivery?
Answer: Yes.
However, it seems the employer must reserve the right as to the requirement with regard to notification of birth. Bust the same should not be unreasonable or unduly unfavourable to the rights of the employee.
17. Can the employee insist on claiming wages in monetary terms instead of the paternity leave?
Answer: No.
It would seem this touches on why the leave is granted in the first place. The father is given the leave to be with the new-born and take care of his responsibilities as a father. However, the law merely states that the employee is entitled and not that it shall go for the leave.
In my opinion, the employer cannot contract the employee to accept cash in place of the absence. The same would likely fail to pass the test of being favourable to the employee. For example, it may amount to acting against the interests of the employee.
However, if the employee opts for cash, and the employer is agreeable, we see no reason why the cash will not serve the purpose. But the employee cannot insist on the cash i.e. force the employer to agree to pay cash and forfeit the leave. It is a matter of discretion of the employer and if it wants the employee to proceed on leave, the employee has no choice. Just same way the employer cannot compel the employee to forfeit the leave for cash when he wants to proceed for the same.
GRATUITY LAW AND PRACTICE IN KENYA
Gratuity is a lump sum amount that an employer pays the employee (on contract) when he retires or resigns from the organization. An employee does not contribute any portion of his salary towards this amount. The rationale for gratuity is to encourage employees to offer longer service to the employer and to ease the termination of contract of employment by offering the sum of gratuity as consolation.
Gratuity is not provided for as a minimum condition of employment. But it has developed as a good practice in employment and employees have come to expect it from their employers.
Gratuity is usually paid in the following circumstances:
(i) when the employee retires
(ii) When the employee resigns
(iii) In event of death of the employee
(iv) In event of disablement i.e. because of accident or illness.
Generally, gratuity is payable upon successful completion of the agreed contract term. In alternative, an employee qualifies for gratuity payment after a specified period of employment, usually five years of service with the employer.
The gratuity payable depends on the terms of the contract of service. The prevalent practice is that the employer pays the employee a month’s basic salary for every year of service. However, there is no reason why the employer and employee cannot agree on alternative amounts.
In essence, gratuity should be a term of the contact of employment. It is not payable if the employee is summarily dismissed as the employee is usually in fundamental of the terms of employment. In such an instance, the employee cannot insist on enforcing the terms of employment against the employer having failed to keep his part of the bargain. But that does not prevent the employee from staking a claim in the industrial court alleging unfair dismissal and citing the need to avoid paying the gratuity as why the employer dismissed him.
With regard to resignation, the contract of employment should state the minimum period that the employee should have served to be entitled to gratuity. Thus if an employee resigns after 5 years he is eligible for gratuity. The law does not anticipate that one will work for a single employer all his life.
If the employee resigns citing ill-health, depending on the stipulations of the contract, he may or may not be eligible for gratuity. The contract of employment may put a limit on the period which the employee must have served to be eligible for gratuity. However, if the ill-health is as a result of work injury acquired while with the employer, the employee may be entitled to claim gratuity, at least for the period already served.
In event of death of the employee, the gratuity is to be paid to the nominee of the employee or the personal representative. Just like in resignation, the contract of employment may stipulate the period that the employee must have served to be eligible for gratuity.
When an employee is laid-off due to redundancy reasons, depending on the stipulation of the contract of employment, the employee should be entitled to gratuity. That is, at least for the years worked as he can argue that, but for the lay-off, he was willing to work until he was entitled to gratuity. But usually, gratuity here is part of the negotiated golden handshake for the lay-off.
Finally, if the employer is undergoing losses or goes into receivership, those are not reasons enough to disentitle the employee to gratuity. Losses do not afford a company the defense to breach a contract, and gratuity is clearly a matter of contract of employment. If the company is under receivership, the affected employees will be entitled to claim gratuity against the receiver of the employer as a contractual debt.
Gratuity is not provided for as a minimum condition of employment. But it has developed as a good practice in employment and employees have come to expect it from their employers.
Gratuity is usually paid in the following circumstances:
(i) when the employee retires
(ii) When the employee resigns
(iii) In event of death of the employee
(iv) In event of disablement i.e. because of accident or illness.
Generally, gratuity is payable upon successful completion of the agreed contract term. In alternative, an employee qualifies for gratuity payment after a specified period of employment, usually five years of service with the employer.
The gratuity payable depends on the terms of the contract of service. The prevalent practice is that the employer pays the employee a month’s basic salary for every year of service. However, there is no reason why the employer and employee cannot agree on alternative amounts.
In essence, gratuity should be a term of the contact of employment. It is not payable if the employee is summarily dismissed as the employee is usually in fundamental of the terms of employment. In such an instance, the employee cannot insist on enforcing the terms of employment against the employer having failed to keep his part of the bargain. But that does not prevent the employee from staking a claim in the industrial court alleging unfair dismissal and citing the need to avoid paying the gratuity as why the employer dismissed him.
With regard to resignation, the contract of employment should state the minimum period that the employee should have served to be entitled to gratuity. Thus if an employee resigns after 5 years he is eligible for gratuity. The law does not anticipate that one will work for a single employer all his life.
If the employee resigns citing ill-health, depending on the stipulations of the contract, he may or may not be eligible for gratuity. The contract of employment may put a limit on the period which the employee must have served to be eligible for gratuity. However, if the ill-health is as a result of work injury acquired while with the employer, the employee may be entitled to claim gratuity, at least for the period already served.
In event of death of the employee, the gratuity is to be paid to the nominee of the employee or the personal representative. Just like in resignation, the contract of employment may stipulate the period that the employee must have served to be eligible for gratuity.
When an employee is laid-off due to redundancy reasons, depending on the stipulation of the contract of employment, the employee should be entitled to gratuity. That is, at least for the years worked as he can argue that, but for the lay-off, he was willing to work until he was entitled to gratuity. But usually, gratuity here is part of the negotiated golden handshake for the lay-off.
Finally, if the employer is undergoing losses or goes into receivership, those are not reasons enough to disentitle the employee to gratuity. Losses do not afford a company the defense to breach a contract, and gratuity is clearly a matter of contract of employment. If the company is under receivership, the affected employees will be entitled to claim gratuity against the receiver of the employer as a contractual debt.
BUSINESS OPPORTUNITIES IN CARBON TRADING IN KENYA
Introduction
The climate change industry promises to be one of the largest in the world and offers the prospect of substantial financial rewards to the Kenyan business Carbon trading (also called emissions trading) is now and established fact. At present 172 countries have endorsed the Kyoto method of arresting climate change through carbon trading trading, Kenya has been a signatory of the Kyoto protocol, the basis of carbon trading since 25th February 2005.
What is carbon trading?
Carbon trading is basically a commercialized activity that originates from protecting the earth from harmful emission of gases from industries. The concept of carbon credit is that of incentivising the units which pollute less and disincentivising the units that pollute more. The most dangerous gases thrown out by the industrial units are six in number - carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflurocarbons and sulphur hexafluoride. The group of such gases, which are responsible for removing greenery from our planet, are called greenhouse gases.
On the initiative of UN (United Nations), Kyoto protocol was signed in 11 December 1997 and it came into force from 16 December 2005. The Kyoto protocol aims to tackle global warming by setting target levels for nations to reduce greenhouse gas emission worldwide. The Kyoto protocol is an agreement by which the ratifying countries have agreed to reduce their emission of greenhouse gases. Under the protocol, initial target is to reduce greenhouse gas emission to 5.2 per cent below 1990 base level. 172 countries have signed the Kyoto Protocol. These countries and their companies are the only ones allowed to engage in carbon trading.
Almost all industrialized countries are huge buyer of carbon credit and all developing countries, where industrialization has not reached its peak, are supplier of carbon credit. Japan is the largest buyer of carbon credit while India and Brazil are amongst the largest suppliers of carbon credit. Being a developing country, Kenya is exempted from the requirement of adherence to Kyoto protocol. Kenya, however, can sell the carbon credits to the developed countries.
How it works?
A central authority fixes the limit of the amount of a pollutant that can be emitted into the environment. Now this limit becomes the permit of pollutants allowed into the environment. This permit is devised into several smaller units and distributed to several companies in the form of permit or credit or allowance. This permit or credit or allowances gives licenses to emit a fixed amount of pollutant into the environment.
Now if a company, say Mumias Sugar Ltd, is able to emit only eight units of greenhouse gases out of 10 units allotted to it, then it will be having two units of emission as ‘credit outstanding’ in its ‘pollution’ account. On the other side, if a company say Coca-cola (USA) Inc. emits 12 units instead of 10 units allotted to it then it will be having two units of ‘debit balance’ in its pollution account. Now Mumias Sugar Ltd will be able to transfer its two ‘credit balance’ to two debit balance account of Coca-Cola. So both the companies’ pollution account will be matched and the environment also is able to digest a certain scientifically fixed amount of pollutants. This transfer from Mumias to Coca-cola (USA) will be for some monetary consideration and hence it is referred as carbon trading.
Carbon credit, as defined by Kyoto protocol, is one metric tonne of carbon emitted by burning of fossil fuels. The GWP (Global Warming Potential) factors are used to convert each of the five gases (like methane, for example) that are not CO2 into tonnes of CO2 equivalent (CO2E), which is the standard of trading. To bring the buyers and sellers of carbon trading on one platform and to augment the process of carbon trading, carbon credits are traded at CO2E exchange in Britain, CDM (Clean Development Mechanism) exchange in Europe. In India recently, MCE (Multi Commodity Exchange) has announced carbon trading exchange with license agreement from Chicago climate exchange. Like the usual stock exchange, carbon credits have all spot transactions, forward settlement and options of trading. Kenya is yet to launch a carbon trading exchange, which is long-overdue.
Prices of credit trading vary and some time back was in the range of Euro six to Euro 12 per tonne of CO2. An estimate suggests that in 2004, 107 million tonnes of CO2 were exchanged through carbon trading worldwide. There is a steep penalty to the tune of Euro 40 per tonne to the companies emitting more than their quota. So companies that are having huge carbon credit can sell these to companies that are deficient in carbon credit or that have exhausted their quota for huge prices.
Big opportunity for Kenyan companies
Most of the beneficiaries of the carbon trading are those companies that are investing in renewable energy like solar, windmills, Biodiesel, Biogas. Actually by investing in such an alternative non-polluting source of energy, these companies will earn carbon credit in the form of CERs (Certified Emissions Reductions) to the tune they have not polluted the environment. These CERs will be sold by the Kenyan companies to companies, say in Japan, at market prevailing rate of CERs and make profit. Companies like KenGen and Mumias Sugar have started projects, which enhance energy efficiency and produce alternative energy and in turn may be earning CERs points. These CERs may be sold to companies in developed countries to earn approximately lift the bottom lines of the concerned companies.
In India, where carbon trading has gained popularity, several companies are adopting such alternative non-polluting sources of energy processes in their production units, which result in earning of CERs. We saw here in Kenya Bamburi Cement launch such production unit. There are huge profits to be made from carbon trading.
Carbon trading is a huge opportunity for Kenyan companies. Companies can earn CERs by adopting energy saving and environment protecting methods and in turn can earn huge incomes by selling them.
Way forward to tap opportunities of carbon trading in Kenya
There is need to establish a carbon trading exchange which is linked to the international carbon markets following the root adopted by India. The challenge here is on the Capital Markets Authority. There is also need for government support in publicizing the opportunities offered by carbon trading to companies and offering incentives to local companies to embrace it. This is a challenge that befalls NEMA and KRA.
The climate change industry promises to be one of the largest in the world and offers the prospect of substantial financial rewards to the Kenyan business Carbon trading (also called emissions trading) is now and established fact. At present 172 countries have endorsed the Kyoto method of arresting climate change through carbon trading trading, Kenya has been a signatory of the Kyoto protocol, the basis of carbon trading since 25th February 2005.
What is carbon trading?
Carbon trading is basically a commercialized activity that originates from protecting the earth from harmful emission of gases from industries. The concept of carbon credit is that of incentivising the units which pollute less and disincentivising the units that pollute more. The most dangerous gases thrown out by the industrial units are six in number - carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflurocarbons and sulphur hexafluoride. The group of such gases, which are responsible for removing greenery from our planet, are called greenhouse gases.
On the initiative of UN (United Nations), Kyoto protocol was signed in 11 December 1997 and it came into force from 16 December 2005. The Kyoto protocol aims to tackle global warming by setting target levels for nations to reduce greenhouse gas emission worldwide. The Kyoto protocol is an agreement by which the ratifying countries have agreed to reduce their emission of greenhouse gases. Under the protocol, initial target is to reduce greenhouse gas emission to 5.2 per cent below 1990 base level. 172 countries have signed the Kyoto Protocol. These countries and their companies are the only ones allowed to engage in carbon trading.
Almost all industrialized countries are huge buyer of carbon credit and all developing countries, where industrialization has not reached its peak, are supplier of carbon credit. Japan is the largest buyer of carbon credit while India and Brazil are amongst the largest suppliers of carbon credit. Being a developing country, Kenya is exempted from the requirement of adherence to Kyoto protocol. Kenya, however, can sell the carbon credits to the developed countries.
How it works?
A central authority fixes the limit of the amount of a pollutant that can be emitted into the environment. Now this limit becomes the permit of pollutants allowed into the environment. This permit is devised into several smaller units and distributed to several companies in the form of permit or credit or allowance. This permit or credit or allowances gives licenses to emit a fixed amount of pollutant into the environment.
Now if a company, say Mumias Sugar Ltd, is able to emit only eight units of greenhouse gases out of 10 units allotted to it, then it will be having two units of emission as ‘credit outstanding’ in its ‘pollution’ account. On the other side, if a company say Coca-cola (USA) Inc. emits 12 units instead of 10 units allotted to it then it will be having two units of ‘debit balance’ in its pollution account. Now Mumias Sugar Ltd will be able to transfer its two ‘credit balance’ to two debit balance account of Coca-Cola. So both the companies’ pollution account will be matched and the environment also is able to digest a certain scientifically fixed amount of pollutants. This transfer from Mumias to Coca-cola (USA) will be for some monetary consideration and hence it is referred as carbon trading.
Carbon credit, as defined by Kyoto protocol, is one metric tonne of carbon emitted by burning of fossil fuels. The GWP (Global Warming Potential) factors are used to convert each of the five gases (like methane, for example) that are not CO2 into tonnes of CO2 equivalent (CO2E), which is the standard of trading. To bring the buyers and sellers of carbon trading on one platform and to augment the process of carbon trading, carbon credits are traded at CO2E exchange in Britain, CDM (Clean Development Mechanism) exchange in Europe. In India recently, MCE (Multi Commodity Exchange) has announced carbon trading exchange with license agreement from Chicago climate exchange. Like the usual stock exchange, carbon credits have all spot transactions, forward settlement and options of trading. Kenya is yet to launch a carbon trading exchange, which is long-overdue.
Prices of credit trading vary and some time back was in the range of Euro six to Euro 12 per tonne of CO2. An estimate suggests that in 2004, 107 million tonnes of CO2 were exchanged through carbon trading worldwide. There is a steep penalty to the tune of Euro 40 per tonne to the companies emitting more than their quota. So companies that are having huge carbon credit can sell these to companies that are deficient in carbon credit or that have exhausted their quota for huge prices.
Big opportunity for Kenyan companies
Most of the beneficiaries of the carbon trading are those companies that are investing in renewable energy like solar, windmills, Biodiesel, Biogas. Actually by investing in such an alternative non-polluting source of energy, these companies will earn carbon credit in the form of CERs (Certified Emissions Reductions) to the tune they have not polluted the environment. These CERs will be sold by the Kenyan companies to companies, say in Japan, at market prevailing rate of CERs and make profit. Companies like KenGen and Mumias Sugar have started projects, which enhance energy efficiency and produce alternative energy and in turn may be earning CERs points. These CERs may be sold to companies in developed countries to earn approximately lift the bottom lines of the concerned companies.
In India, where carbon trading has gained popularity, several companies are adopting such alternative non-polluting sources of energy processes in their production units, which result in earning of CERs. We saw here in Kenya Bamburi Cement launch such production unit. There are huge profits to be made from carbon trading.
Carbon trading is a huge opportunity for Kenyan companies. Companies can earn CERs by adopting energy saving and environment protecting methods and in turn can earn huge incomes by selling them.
Way forward to tap opportunities of carbon trading in Kenya
There is need to establish a carbon trading exchange which is linked to the international carbon markets following the root adopted by India. The challenge here is on the Capital Markets Authority. There is also need for government support in publicizing the opportunities offered by carbon trading to companies and offering incentives to local companies to embrace it. This is a challenge that befalls NEMA and KRA.
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