8/12/2019 Turning Resource Curse Into Opportunity
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| Nairobi Business Monthly June
INSIDE
Insights
Working from home is becoming more popular because it is cheaper, convenient and more
comfortable. Unlike working from the formal o ffi ceenvironment, there is very little supervision.
IDEAS
FEATURE: SOCIETY & CULTURE P.56
Be vigilant about the
resource discovery process.
There are good and bad ways
of discovering resources.
Good practices are to gather
and analyse geological infor-
mation, so that the govern-
ment is properly informed
before it begins negotiations
with extraction companies.
Rule of thumb: Don’t
sell prospecting rights at
once and don’t sell them
without time limits. Use a
competitive and transparent
process.
Analyse
information
Take care
of locals
Value the
resource
Think of
prosperity
Assets to
acquire?
Resources under the ground
are a sovereign assets
belonging to all citizens,
and the profits should be
shared. Local communi-
ties should not have the
right to veto a decision on
resources; avoid a repeat of
the Niger Delta. All environ-
mental damage should have
full, generous and reliable
compensation.
Rule of thumb: Set up
a system for credible
compensation, and then
allow full and transparent
participation in benefits by
all citizens.
Capture the value of the
resource for society.
Resource extraction doesn’t
generate jobs for the host
country so the country needs
to generate value for itself by
developing and implementing
a good tax system. How can
one eff ectively harness natu-
ral resources? Set up rules
to ensure sound economic
decision-making and build
dedicated institutions to help
reinforce the rules.
Rule of thumb: A good tax
principle is taxation that you
can observe, he says.
Balance the benefits to the
present generation and the
benefits to the future gener-
ation. Create a critical mass
of citizens who know and
understand the rules and
issues. Resource discover-
ies will not last long. For
instance, Uganda’s oil wells
have been projected to last
for around 25 years.
Rule of thumb: The
proportion of assets that
is dedicated to savings
and investments should be
balanced with the propor-
tion that is invested in
consumption.
Norway handled the discov-
ery of oil very well. It bought
foreign assets. This was a
sensible decision for them
because the country already
had enormous capital
investment, but it would
be foolish for Africa which
needs capital locally. Africa
needs to build the capacity
to invest well.
Rule of thumb: conduct
a cost and benefit analysis
on every project. Look at
design, selection, imple-
mentation and, most impor-
tantly, evaluation.
— Compiled by Aamera Jiwaji
1 3 2 4 5
British economist Paul Collier, and
author of The Bottom Billion and
The Plundered Planet , gave the
keynote lecture at the Thomson
Media Foundation training. He
outlined the FIVE steps Kenya can
follow to avoid the oil curse.
The whole chain from step 1 to
step 5 has to go right, and for a
whole generation, if Kenya is to
pull itself out of poverty. Kenya has
approximately five years before
the oil comes out of the ground
and this time needs to be used to
build capacity for investment, to
scale up existing investments and
not to consume.
For instance, Ghana is saving
30% of oil revenues for future
generations. Norway did a similar
thing. They invested in pre-school
education. As Kenya gears up for
national elections, our political
parties need to commit not to how
much they will spend but how
much they will invest.
Turning a resourcecurse into opportunity
Brie fi ng
