East Africa pushes for local content laws to secure community interests

Tuesday December 4 2018

Kenya crude oil

Police guard trucks loaded with crude oil, during a stopover at Kalemngorok on the Lokichar-Kainuk road June 03, 2018. FILE PHOTO | NMG 

By NJIRAINI MUCHIRA
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Investors in East Africa’s extractives sector will have to show how local communities will benefit from mining activities before being licensed.

This is according to new laws that Kenya and Uganda are pushing to guarantee local communities get maximum benefits from minerals, oil and gas in their areas.

Both countries have drafted Local Content Bills for investors in the extractives sector to develop plans on how local communities will benefit through employment, value addition, technology and knowledge transfer.

The laws aim to promote value-addition through local expertise, goods, services, businesses and financing.

Tanzania has also drafted local content regulations for the mining sector.

In Kenya, the Local Content Bill 2018, which is currently being debated by the Senate, has received massive support on the basis that it will be a catalyst for economic prosperity among communities where oil, gas and other minerals have been discovered.

“We want our natural resources to benefit all of us,” said Baringo Senator Gideon Moi, who is the sponsor of the Bill.

Without a clear roadmap, investors have opted for ad hoc corporate social responsibility like funding education, health and water facilities to win over local communities.

These initiatives have been seen as a raw deal because the investors and the government rake in millions from the resources.

In Kenya, there is still tension between British explorer Tullow Oil and local communities around the Turkana oilfields as the country plans to start commercial production of crude in 2021.

In June, the community had blocked the trucking of crude to Mombasa under the Early Oil Pilot Scheme.

The local content laws also aim to ensure that investors source at least 40 per cent of goods, services and expertise locally.

Currently, investors spend up to 80 per cent of their total outlay on products and costs from outside the area where the minerals are.

Although the Kenyan Bill has received widespread support from legislators, civil society and communities, there are concerns it will create duplication and confusion.

Kenya has already enacted the Mining Act and is in the process of passing the Petroleum (Exploration, Development and Production) Bill. Both address how investors should relate to local communities.

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