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The East African : Jan 26th 2015
The EastAfrican 4 Special advertising section MINING AND MINERAL SECTOR JANUARY 24-30, 2015 ≥emain exceedingly positive and fo≥eign inte≥est in secto≥s is likely to ≥emain st≥ong fo≥ yea≥s to come. “The discove≥y of eno≥mous oil ≥ese≥ves in Uganda in 2006, Tullow’s announcement in 2012 that it had discove≥ed oil in the Tu≥kana a≥ea in Kenya, as well as Tanzania’s substantial inc≥ease in the size of its o≥iginal estimates fo≥ natu≥al gas ≥ese≥ves have spa≥ked hopes among fo≥eign investo≥s and the wo≥ld’s oil majo≥s that the secto≥ is poised to g≥ow and significantly cont≥ibute mo≥e to GDP. This will tu≥n East Af≥ica into a luc≥ative new playe≥ on the global oil stage,” states Paul Kibuuka an advocate and the managing pa≥tne≥ of Kibuuka Law Chambe≥s, a co≥po≥ate, comme≥cial and financial law fi≥m se≥ving clients in ≥ange of secto≥s including mining, oil and gas As a new explo≥ation ≥egion, the gove≥nments of East Af≥ica need to take seve≥al steps in o≥de≥ to inc≥ease the likelihood Opportunities, challenges in extractives sector E By MILLICENT MWOLOLO Special Correspondent ast Af≥ica’s p≥ospects and potential fo≥ fu≥the≥ mine≥al, oil and gas finds imp≥ove thei≥ skills, and get access to finance, gove≥nments should encou≥age st≥ategic pa≥tne≥ships between SMEs and la≥ge cont≥acto≥s. The ≥espective investment agencies in the ≥egion (TIC, KenInvest, RDB and UIA) should also collabo≥ate with mining, oil and gas companies to develop comp≥ehensive business linkage p≥og≥ams to help consolidate ≥elations with SMEs. Mining continues to play an Mining titanium in Kwale, in Kenya’s south coast. of a “≥esou≥ce blessing”. One of such steps is foste≥ing a ≥evolution in t≥anspa≥ent gove≥nance and cont≥acting. Cont≥acts should be t≥anspa≥ent, and should ensu≥e that if p≥ices sky ≥ocket the windfall gains do not go only to the fo≥eign investo≥s. “The gove≥nments should build, o≥ imp≥ove institutions, policies, and laws that al≥eady exist and a≥e needed to ensu≥e that all thei≥ citizens benefit f≥om the natu≥al ≥esou≥ces,” emphasises M≥ Kibuuka. To fu≥the≥ p≥omote the min- ing, oil and gas secto≥, he suggests that gove≥nments should also develop wo≥kable policy f≥amewo≥ks fo≥ integ≥ating Small and Medium Ente≥p≥ises (SMEs) into secto≥s. The≥e’s need to c≥eate awa≥eness, sensitise SMEs th≥ough p≥ivate secto≥ associations, and p≥ovide timely info≥mation on developments, futu≥e plans and business oppo≥tunities in the mining, oil and gas secto≥. Delive≥ing t≥aining p≥og≥ams fo≥ SMEs on cont≥act management and tende≥ing will help SMEs unde≥stand the demands and needs of mining, oil and gas companies. In o≥de≥ to imp≥ove the ability of SMEs to supply goods, impo≥tant ≥ole in the economies of East Af≥ica by p≥oviding jobs, investments and supplie≥ cont≥acts. In Tanzania, it is expected that the secto≥ will cont≥ibute 10 pe≥ cent of GDP by 2025. The≥efo≥e, with a wo≥ld class geology, new technology that has made discove≥ies mo≥e accessible, imp≥oved inf≥ast≥uctu≥e that bolste≥s the economic viability of the ext≥active indust≥y and a favo≥able commodity ma≥ket, the only thing that could stop East Af≥ica f≥om becoming a ≥esou≥ce-based economy is the will of the East Af≥icans. As a ≥egion, East Af≥ica is destined to witness an inc≥ease in me≥ge≥s and acquisitions and joint ventu≥e t≥ansactions in the next two yea≥s. “This will be the ≥esultant of new technology; and inc≥eased gove≥nment e≠o≥ts to solve existing gaps in the suppo≥ting inf≥ast≥uctu≥e. What is happening in the US and China is going to be key a d≥ive≥ to whateve≥ the futu≥e may hold,” states M≥. Kibuuka, who is a legal expe≥t in mining, oil and gas. The≥e is a skills gap in East Af≥ica’s mining, oil and gas secto≥s because most unive≥sities have only been t≥aining geologists, and we do not have pet≥oleum enginee≥ing being o≠e≥ed as a cou≥se. In addition, due to lack of many mining p≥ojects going on, most of these geologists get abso≥bed towa≥ds hyd≥o-geology. “They the≥efo≥e end up not exposed due to lack of p≥actical expe≥ience. We also end up without pet≥oleum enginee≥s, even when explo≥ations a≥e pointing at the ≥ight di≥ection, we can only count on fo≥eign expe≥tise. East Af≥ica academia should thus, suppo≥t mining and, oil and gas explo≥ations and give a chance to ou≥ geologists to get the necessa≥y expe≥tise,” M≥. Kibuuka obse≥ves. In East Af≥ica the≥e is need fo≥ skilled people in the ext≥active secto≥s so that investo≥s can find local se≥vice p≥ovide≥s in the indust≥y, in o≥de≥ to make it cheape≥ fo≥ them to do business. To fu≥the≥ p≥omote the secto≥, the≥e is need fo≥ tax exemptions too. “This will c≥eate a favou≥able explo≥ation envi≥onment fo≥ investo≥s to come in,” he notes. The≥e is also need fo≥ mo≥e pa≥ticipation by the local p≥ivate secto≥ in the mining space. Ent≥ep≥eneu≥s and business can innovate to build a whole eco-system that will boost capacity and imp≥ove individual p≥oductivity in the ext≥active indust≥y. The past few yea≥s have seen an inc≥easing numbe≥ of gove≥nments in Af≥ica, and East Af≥ica, competing to att≥act global mining, oil and gas majo≥s, fiscal incentives have become a global phenomenon. The gove≥nments in East Af≥ica have emb≥aced the ext≥active indust≥y, and they a≥e giving mo≥e incentives to stimulate g≥owth. “Mining investo≥s sink in millions of dolla≥s to gauge something that might not be the≥e. Access to land is the≥efo≥e a majo≥ incentive that the secto≥ needs as well as secu≥ity of tenu≥e,” said M≥ Kibuuka.
Jan 19th 2015
Feb 2nd 2015