Mistrust and bureaucracy hurting extractive sector growth - experts

Bureaucratic procedures and mistrust between governments and investors are frustrating the development of the regional extractive industry, including oil and gas, whose exploitation could turn around the region, experts have said. The experts were discussing mechanisms on managing the region’s mineral wealth for broad -based and inclusive economic growth development in the East African Community (EAC) in Kigali last week. “The recent discoveries of oil and gas will completely change the dynamics of doing businesses in the region. “This calls for the enactment of enabling laws that will attract more investment in the extractives industry and also promote interests of local communities and ensure sustainable resource exploitation,” Mary Mukindia, a Nairobi-based oil and gas consultant, said. She also called on regional governments to invest in capacity building of their people and local firms so that they can acquire requisite skills to contribute to the sector’s development and participate meaningfully. Mukindia also urged EAC governments to invest in infrastructure and emphasise value addition along the value chain. “Governments should understand that they are the biggest stakeholders and therefore work toward streamlining regulations that govern the sector. This includes reducing bureaucracy and drafting laws that will attract both local and foreign investors into the sector,” she said. She added that laws which promote local content, openness, governance and ensure environmental protection are essential for the industry and to ensure the region benefits from its natural resources. Predeep Paunrana, the chief executive officer, Athi River Mining, a Kenyan firm, called on the private sector to play a key role, especially in supporting skills development and financing to ensure inclusive growth. Paunrana advised firms involved in the extractive industry to contribute to the development of local communities in which they operate to improve the living standards of the people. “Investors need to understand that supporting the local communities and involving them in the industry, especially giving local firms tenders, is one of the best practices for any company,” Paunrana added. Richard Omwela, the managing partner at Hamilton Harrison and Mathews, a consultancy firm, said there is need for governments to invest more in geological surveys for a better understanding of region’s mineral wealth. “The EAC should focus on processing the minerals and oil within the region to create jobs for the people and ensure maximum gain from the natural resources,” In the past few years, commercial oil and gas discoveries have been made in Uganda, Kenya and Tanzania. All the oil and gas discoveries are at different levels of development and the three countries project to have their first oil within two or so years. Rwanda has resumed oil exploration activities after Canadian explorer licence was annulled following disagreements with the government on some issues. The region is also rich in minerals like wolfram, gold, diamond, tin and cassetirite. Rwanda mainly produces cassiterite, wolfram and coltan. The sector’s production increased by 14.2 per cent during the first half of 2014, according to the central bank data. The country is also looking to exploit its methane gas in Lake Kivu to develop methane-to-power projects. The methane in Lake Kivu is estimated to be sufficient to generate 700MW of electricity over a period of 55 years.

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Mistrust and bureaucracy hurting extractive sector growth - experts