The Local Content Bill 2016 sponsored by the Baringo County Senator, Hon Gideon Moi is currently before the Senate. This bill is designed to provide a legal framework to facilitate the local ownership, control and financing of activities connected with the exploitation of gas, oil and other mineral resources in Kenya. Expectations are that it will provide a framework of increasing uptake of jobs, contracts for supply of goods and services by locals in the exploration sector and cushion locals from exploitation.
This comes in the wake of high rates of unemployment in Kenya and limited local skills in the oil, gas and extraction sector. Consequently, this bill seeks to protect jobs that can be taken by locals and to encourage foreign companies to support local businesses by awarding them contracts or sub contracts for goods and services and further to address situations where local communities have been protesting exclusion by Foreign companies in allocation of contracts or sub contracts by requiring all multinationals to provide a plan on skills and technology transfer to locals.
I will focus on the segments that address issues of skills transfer and employment of expatriates within the oil and gas sector and also ventilate on; who is local and what does it mean? Are there existing policies or localisation? Is this bill the panacea to all matters ado expatriates in Kenya? If passed, how successful will we be in enforcing this law and who are the critical stakeholders in this among other issues of concern.
Many countries in Africa and elsewhere in the world, have in place localisation policies that mostly take the names of the countries such a Kenyanization, Gabonisation, Saudianization…to mention a few. Such policies were initially intended to facilitate the transfer of mainly the public service jobs from remnants of colonial masters to indigenous people. At independence, many white collar jobs were held by foreigners mostly from the colonizing empires such as Britain, France and Germany and as such an affirmative action was required to ensure that those jobs were gradually handed over to locals. Over time and space this has been transformed to cover the transfer of skills and jobs from expatriates to locals. In Kenya, there is a Kenyanization policy at the Department of Immigration which is meant to ensure that only jobs that require skills not readily available in Kenya are held by expatriates or foreigners and that there are Kenyan nationals understudying the expatriates with a view to localizing the jobs over time. There used to be a section called Kenyanization section at the Department of Immigration Services (DIS) that was tasked with enforcing this policy by looking at all applications for employees work permit’s to ensure that evidence is availed by the employing company to prove that no Kenyan was qualified for it and that a Kenyan understudy had been identified to get training from the expatriate. Although the section has now been merged with the Permits section, the Kenyanization function still exists and is considered for all permit applications in line with the localisation policy.
An important question to ask ourselves, is who is local and what does local really mean? Looking at the bill casually one may think that local means Kenyan. While this is true, it goes further down to the exact location of the project. A lot of the viable oil and gas rigs are now in Northern Kenya like Turkana where Ngamia 1 is located. Using this example local has two meanings: Kenyan and the community around the oil wells, in this case Turkanas. Whereas the company may be 100% employing Kenyans it would be fundamental for the community around the project to be a big percentage of the employees. In my view, the bill should have laboured to define the local person to the specific man or woman historically residing in the areas where such a project is taking place. Part IV addresses the local content plans where local content means “maximizing the level of usage of local goods and services, people, business and financing”. I must say it is quite elaborate because it sets out the modalities and framework for ensuring that companies applying for various permits to operate in the industry must meet a set criteria for local content.
However, in terms of human capital, the bill seems to focus exclusively on the role the companies seeking to operate in this sector will play without addressing the role to be played by government ministries in charge of education and energies. As we speak, the government is well aware that Kenya is on its path to being an oil producer and that there are no properly trained professionals in this field. I would have expected to see the bill tasking the relevant ministries to work with our technical schools, universities and companies setting up in the sector to develop curriculum to train our people to make them ready for the market when things start rolling. To require that only companies that will be involved in the sector should train and avail skills required is tantamount to government absconding it’s duties. Granted, the operators in the industry will be required to offer tailored skills to their employees to enable them perform, but the overall responsibility of training citizens in readiness for the industry should be undertaken by the relevant universities following a curriculum jointly developed by key stakeholders. Why are we sitting pretty and waiting for extraction to start then start demanding that the companies involved in the process look around for qualified Kenyans to employ and if they are not available, train them? Can we not be proactive and develop a curriculum for our universities and technical colleges to start training such people way before extraction proper starts?
Local content law for extraction industries is a good idea but in my view not enough. As it is, this bill only addresses itself to this sector and not any other. I think it would have been more useful to develop a local content law that cuts across all sectors of our economy that in effect guides specific sectors as the case may be. I would, for instance, like to see this bill address itself to the huge infrastructural projects undertaken by the national government where we have seen foreign contractors bringing in foreigners to do simple jobs like operating a grader! The very specific nature of the bill may bring about a situation where each sector seeks to come up with its own law on local content which would be a duplication of laws and would confuse people. Why cant we have one local content law that sets the framework to guide all sectors with one board and secretariat that is comprised of stakeholders from key industries? The sectors may be diverse but the approach is basically the same…empowering Kenyans to compete fairly with others regardless of the sector. That said, I believe that a good law may not achieve the expected results if not well implemented.
In Kenya today, good laws are in place but implementing them is the real deal. The institutions tasked with implementation are either incapable or unwilling to implement. Giving the example of the Kenyanization policy at Kenya Immigration, the problem has been that the Department of Immigration is not adequately empowered to implement the policy. In cases where they have attempted to implement with zeal, political interference and corruption have defeated their efforts. This eventually demoralizes the implementers and defeats the whole idea. I am therefore hoping this law will be passed with amendments to broaden it to cover other sectors of the economy and those tasked with it given enough support to implement it. We also need to ask ourselves if key stakeholders have been consulted in the drafting of this law because although this bill is for the extraction industry there are critical government agencies like Immigration, KRA, Police, Labour that will be critical in ensuring it succeeds. The composition of the board and the local content development committee limits itself mainly to extraction industry and does not even incorporate such departments as labour which in my view should be a permanent member of the committee and the board. This seems to be relegated to sub committees that may be constituted under section 15 & 16.
In conclusion, I must applaud the Hon. Gideon Moi for thinking about this bill because indeed it will be necessary to have a legal framework to ensure that locals benefit from resources found within their areas. I hope this marks the beginning of a discourse on how best we can capture the issue of skills and knowledge transfer not only for the extractive industry but also for other sectors of the economy.