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.

This article analyses the use of economic incentives, particularly the Environmental Performance Deposit Bonds (EPDBs) in enhancing sustainable environmentally sound mine operations and closure. This is through a review of the environmental challenges and management practices at the Kwale Mineral Sands Project which is Kenya’s ;largest mining project. The article reviews the legal challenges around the effective regulation and application of the bonds for environmental management in upstream mining, as well as how the titanium mining project is undertaking environmental management as the mine approaches its closure deadline in 2023. It is important to note that Base Titanium, the company undertaking this project voluntarily deposited environmental reclamation deposit bonds of USD 512,000 to the environmental regulator, as financial assurance for good environmental practices. The data used in the analysis is from literature review, key informant interviews, interview schedules, and focus group discussions. Results indicate that Base Titanium is working hard to comply to the environmental standards and practices, applying the mitigation hierarchy approaches, as well as a robust mine reclamation process. The lack of a proper legal and regulatory framework governing Environmental Performance Deposit Bonds (EPDBs), as well as a non-existent deposit bonds registry systems and guidelines is a challenge to their effective institutionalization. The public and key stakeholders are also unaware of the existence of the bonds, unlike the well-laid down public participation principles in the Environmental (and Social) Impact Assessments (ESIAs) and Environmental Audits (EAs). While the study acknowledges that Base Titanium is greatly expanding the discourse on sustainable finance models for environmental management in Kenya, the lack of legal clarity and coherence is a major impediment for progressive growth in this area. Keywords: Environmental Performance Deposit Bonds (EPDBs); Sustainable Development; Remediation; Environmental and Social Impact Assessments (ESIAs).

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