Local Content Bill can protect Kenya against ‘resource curse’The official launch of the Local Content Bill, 2016 by members of the Senate Standing Committee on Energy on September 1, marked the culmination of a public demand for legislation to provide for local content in the extractive industry.
The Bill can simply be termed as the most significant piece of legislation touching on the extractive industry and especially the oil and gas sector that the current National Assembly will ever handle.
It is a Bill tailor-made to cushion the country against the infamous ‘resource curse’ – a term closely associated with African countries who despite immense natural resources like minerals and crude oil, suffer from poor economic growth and constant civil strife.
As a result, this breeds widespread corruption and poor governance which leads to the failure by the governments to build local capacities in terms of training, technology transfer and employment in the sector. This debacle leaves the country, however how rich it is in terms of natural resources, exploited and drained of its resources.
Avoiding the ‘resource curse’ was one of the key issues raised by the public in 2012 after the government announced that commercially viable oil had been discovered in Turkana.
If enacted, the Bill will provide for a framework for the development and adoption of local content in the upstream oil sector through ownership, control and financing of activities connected with the exploitation of gas, oil and other mineral resources by local persons and local enterprises.
It focuses on ensuring that the influx of the upstream oil and gas companies will lead to the development of local communities and people through the mandatory provision of employment, training and transfer of technology.
Further, the local economies are primed to benefit through the mandatory preference for local goods and supplies, development of local capacities in the sector and the overall stimulation of industrial development.
Among the key benefits to Kenyans will be the requirement that the players in the industry give first consideration to goods produced and services delivered locally as well as the requirement for granting of first priority to qualified local persons with respect to employment by the operator.
The Bill seeks to ensure that Kenya benefits from the natural resources by ensuring that there is constant employment, skills development and training of locals, technology transfer and preference for local contractors.
Through the requirement of succession plans, it guarantees that corporations in the industry will train Kenyans with the purpose of readying them for uptake of top positions of management in the future.
The Bill further ensures that in the future, local content requirements are actually fully implemented by creating the Local Content Training and Development Fund and requiring that the extractive industry players remit such percentage of their net revenues as will be determined by the government to the Fund for the purpose of training locals.
By MESHACK MBOYA