Local Communities Should Enjoy Local Extractive Sector Benefits Says ECA's Karingi

Photo: United Nations
The United Nations Conference on Trade and Development (UNCTAD) is a subsidiary organ of the United Nations General Assembly, established in 1964 to promote trade, investment, and development in developing countries. Theme of #UNCTAD14: from decision to action: moving toward an inclusive and equitable global economic environment for trade and development
18 July 2016

Nairobi — Local communities should benefit from extractive industries in their respective areas through, among other things, the generation of opportunities and entrepreneurship says Director Stephen Karingi of the Regional Integration and Trade Division at the Economic Commission for Africa (ECA).

Speaking in a panel discussion on 'Establishing high-value local content in extractive industries' at the Global Commodities Forum in Nairobi, which is part of the 14th United Nations Conference on Trade and Development, Mr. Karingi said extractive industry revenue should be used to transform the lives of people from across the population, particularly those in the local area where the extraction is taking place.

He said while the resources would benefit all in society, it was important for governments to ensure they invested towards the diversification of their economies and sustainable development by making sure some extractive sector benefits were set aside for locals.

In this session, which was chaired by Liberia's Vice Minister of Lands, Mines and Energy, Samuel Russ, panellists reviewed the necessary conditions for local content development, as well as best practices among foreign investors and local entrepreneurs. Special attention was be paid to higher-value inputs in extractive industries.

Other panellists were Mwendia Nyaga, CEO, Oil and Energy Services, Kenya, and Nancy L. Swartout, Global Sustainable Procurement Manager at ExxonMobil Global Services Company.

Local content, said Mr. Karingi, can be an important means of generating opportunities and entrepreneurship through extractive industries but, he added, this has to be managed well to ensure locals also benefited from the riches found in their respective areas.

Mr. Karingi noted that local content policies have worked differently in different countries, adding that certain key criteria are necessary for their success.

"They have to be realistic, that the host economy has the capacity to supply the services or labour specified under the local content policy and that they are developed in collaboration with the private sector," he said.

Mr. Karingi also emphasised that it is important for local content policies to be transparent and predictable, adding this would reduce the burden on business by allowing businesses to plan how to respond to these requirements.

He expressed support for regional cooperation on local content policies, including other policies that can support intra-regional trade such as development of regional infrastructure and payments systems interconnectivity.

The other panellists urged for local content requirements to be non-binding, to be time-limited and discussed the potential role of donors in supporting feasibility studies on local content requirements.

They also mentioned business-match-making and training programmes that they are supporting which they said could help to increase firms' use of local content.

ECA's recent report, Transformative Industrial Policy for Africa, gives further details on how local content requirements may be used to good effect.

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