Published On: Wed, Sep 2nd, 2015

Are East Africa Countries doing enough to invest in Human capital to be able to manage the oil & gas wealth?

Op -ed By Thuo Daniel Njoroge 

Mr Thuo Njoroge Daniel

Mr Thuo Njoroge Daniel

Introduction

The East African community (EAC) countries are about to join the league of oil producing countries. There are many parts of the world where discovery of natural resources have benefited the citizens much. For instance, Norway has been able to transform the oil wealth for the benefit of its citizens making them the wealthiest in the world. Moreover, United Arab Emirates and Qatar have been able to transform their economies with the help of oil and gas resources. Further afield, Malaysia has been able to achieve middle income  status and heading to high income status with oil resources playing a big part in this.1

Unfortunately, the success story of these countries is not replicated in much of sub-Saharan Africa (SSA). Most countries in SSA endowed with oil resources have not been able to use the resources to improve the lives of their people. Most countries in  SSA have been plagued by the resource curse.2 It is therefore imperative to assess whether EAC countries are building legal, infrastructural as well as human capacity to enable them utilize the oil and gas resources for the good of the people in these countries.

 

Human Capacity Development in Gas and Oil Sector

Kenya

The government of Kenya has instituted  reforms and development in the petroleum sector that have been aimed at preparing the country for the extraction of oil and gas that has been discovered recently.3 In relation to development of human capital, the government of Kenya received $50 million from the World Bank as an International Development association (IDA) loan aimed at assisting the country in developing human capital.4 This loan is aimed at enabling the Government of Kenya (GoK) to enhance human capital to effectively manage the petroleum sector in light of successful discovery of oil and gas. The project started in October 2014 and is expected to run until 2021. The EAC notes that discovery of oil requires strong human capacity, governance standards and environmental safeguards.5

Proceeds of the IDA loan will be applied in establishing skills gap analysis, building capacity on revenue and investment management which will include building capacity in transparency and accountability and enhancing capacity in public investment management. Human capital areas focused by the program include skills assessment and mapping at the ministry level and programs aimed at strategically developing national skills framework for the oil and gas upstream sector. However, human capital in the oil and gas sector has been ongoing in Kenya albeit on a small scale. This has been spearheaded by the School of Petroleum Studies which was incorporated in 2007 by Petroleum Institute of East Africa (PIEA). This school provides specialized training that is focused on downstream and upstream oil and gas.

Uganda

Uganda oil exploration has seen $2.9b transaction for oil exploration involving Tullow Oil, Total and China’s National Oil Offshore Corporation (CNOOC).6 Uganda anticipates major oil production by as early as 2019. In building human capacity to effectively manage revenues from the oil and gas sector, Uganda started preparing in 1986.7 However, the training and technical skill enhancement was in small scale and involved little specialized training consolidated with numerous short term courses in various aspects of the oil industry covering technical, legal and economic matters. The training has gained momentum in 2012 where the Petroleum Exploration and Production Department formed in 1991 was made independent in production of learning materials, managing geophysical, geochemical and geological data, analysis and interpretation of data. The department also has capacity to negotiate production sharing agreements, monitoring of petroleum operations and preliminary analysis of rock and oil samples.

To be able to cope with large scale oil and gas production, the government of Uganda needs to increase its investments into building human capacity. Though the ongoing human capital development is adding value to the oil and gas sector, more investments need to be channeled to human capital development to extensively improve the human capacity to be able to manage revenues from the projected oil and gas extraction.

Tanzania

The Government of Tanzania through the Ministry of Energy and Minerals has a plan to train 1350 persons in minerals, oil and gas by June 2016. This is expected to be achieved by sending some abroad while local institutes and universities like University of Dodoma, University of Dar es Salaam, Nelson Mandela-African Institute of Science and Technology and Dar es Salaam Institute of Technology will train others. However, these institutes do not even have a standard curriculum suitable for the oil and gas sector.8 The enormity of the challenges and task ahead in creating the requisite skill base for effective management of the oil and gas sector calls for ‘a comprehensive manpower training program would need to be designed and implemented as a nationwide coordinated program’9.

Conclusion

Oil exploration in the EAC countries is still ongoing and commercial exploitation is slotted for the near future.10 In this period of transition to establish the extent of available oil and gas reserves, the governments of EAC countries should take this opportunity to ensure that they equip themselves with the requisite technical knowhow to enable their people to be able to manage the new oil and gas resources effectively.

Page BreakReferences

A Huurdeman and B Handjiski, Lucky Countries Or Lucky People: Will East Africans Benefit From Their Natural Resource Discoveries? 2015. Accessed from: http://www.brookings.edu/blogs/future-development/posts/2015/02/05-natural-resources-africa-handjiski-huurdeman.

African Development Bank, Managing Oil Revenue in Uganda: A Policy Note, (2008) National Seminar on Managing Oil Revenue in Uganda, Munyonyo Commonwealth Resort, Kampala, 8-9 July.

DA Yates, The scramble for African oil: oppression, corruption and war for control of Africa’s natural resources, (2012). London: Pluto Press.

T.Njoroge Daniel Petroleum contracts and taxation: Is East Africa prepared? (2015). Oil, Gas & Energy Law Intelligence, 13 (4), 1 – 15.

East African Community and International Monetary Fund, Fiscal Management of Oil and Natural Gas in East Africa, (2014), African Community and International Monetary Fund Workshop, January 15 – 17, Arusha, Tanzania.

JL Simbakalia, Challenges Ahead for Tanzania to Build New Capacities for Gas Industry Development (2013). ESRF Discussion Paper No. 51, The Economic and Social Research Foundation (ESRF)

RI Rotberg, Africa emerges: consummate challenges, abundant opportunities, (2013). Cambridge: Polity Press.

Tullow Oil, Creating shared prosperity in Uganda (2012). Uganda country report.

Tullow Oil, East Africa exploration and appraisal update, Press Release, 21 February 2014. Accessed from: http://www.tullowoil.com/index.asp?pageid=137&newsid=833.

World Bank, Kenya Petroleum Technical Assistance Project (KEPTAP): General Procurement Notice, (2015). Accessed from: http://www.worldbank.org/projects/procurement/noticeoverview?id=OP00031651&lang=en&print=Y.

 

Author‘s Profile 

 

Thuo Njoroge Daniel is Macro Economist, an independent Consultant and a Research analyst with high interest in Energy Economics specialization Oil and Gas. 

He also lectures Economics and Policy Analysis at School of Business Karatina University in Kenya  

 

Email: buttinjorob80@gmail.com

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Are East Africa Countries doing enough to invest in Human capital to be able to manage the oil & gas wealth?
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