Local Content Bill should deal with more than just extraction industries

The Local Content Bill, 2016, sponsored by Baringo Senator Gideon Moi, is currently before the Senate. The Bill is designed to provide a legal framework to facilitate the local ownership, control, and financing of activities connected with the exploitation of oil, gas, and other mineral resources in Kenya.

Expectations are that it will provide a framework for increasing uptake of jobs, contracts for supply of goods and services by local people and cushion them from exploitation while building up their skills. The Bill comes in the wake of limited local skills in the extractives sector and seeks to encourage foreign companies to support local businesses by awarding them contracts or sub-contracts for goods and services where they qualify and address situations where local communities have complained that they are excluded from the allocation of contracts or sub-contracts. 

Many countries in Africa have in place localisation policies that were initially intended to facilitate the transfer of mainly public service jobs from remnants of colonial masters to indigenous people. Over time, this has been transformed to cover the transfer of skills and jobs from expatriates to local people.

There is a “Kenyanisation” policy at the Department of Immigration that is meant to ensure that only jobs requiring 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 eventually localising the jobs. The role of ensuring that this policy is implemented lies with the permits section.

ASK OURSELVES

An important question to ask ourselves is: who is local and what does “local” really mean? A cursory look at the Bill might suggest that “local” means Kenyan. The Bill goes further to the exact location of the extractive project in question. A lot of the viable oil wells are now in 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 per cent employing Kenyans, it would be fundamental for the community around the project to be given priority. 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.

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 of the government ministries in charge of education and energy and petroleum.

Kenya is on the way to becoming an oil producer and there is a dearth of properly trained professionals in this field. I would have expected to see the Bill tasking the relevant ministries to work with technical schools, universities, and companies setting up in the sector to develop curriculum to train Kenyans in the disciplines required. To require that only companies that will be involved should train and make the required skills available is tantamount to the government absconding its duties.

TAILORED SKILLS

Granted, the operators will be required to offer tailored skills to their employees, but the overall responsibility of training citizens in readiness for the industry should be undertaken by the relevant institutions using a curriculum jointly developed by key stakeholders. In this regard, it is encouraging to see that Tullow Oil is working closely with the Technical and Vocational Education and Training Authority to develop requisite programmes.

While the Bill for extraction industries is a good idea, it would be worthwhile to make it cover other sectors such as the big infrastructural projects undertaken by the national government, where we have seen foreign contractors bringing in non-Kenyans to do simple jobs such as operating a grader.

The 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 lead to duplication – indeed this has already happened in the construction industry.

It could be argued that Kenya should have one local content law that sets the framework to guide strategic sectors. This would empower Kenyans to compete fairly with foreigners regardless of the sector. For the Bill to succeed, there should be wide stakeholder consultation - the support and involvement of critical government agencies and departments such as Immigration, Kenya Revenue Authority, Kenya Police Service, and Labour Ministry would be paramount.

George Mucee is practice leader, Fragomen Kenya.

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