EADB Builds Expertise on Better Natural Resources Deals

Dar es Salaam, September 11, 2014 … Honourable Mizengo P. Pinda, MP Prime Minister of the United Republic of Tanzania, at a function attended by senior government officials, has asked public sector lawyers in East Africa to avoid undue influence and consider the public interest when negotiating contracts with investors in the natural resources sector. |

The function was attended by Mr. George Masaju, the Deputy Attorney General of the United Republic of Tanzania, Dr. Servacius Likwelile, PS, Ministry for Finance, United Republic of Tanzania and EADB Board Member, Mrs. Khadija Simba, an EADB Board Member, representing the private sector in Tanzania, Ms. Vivienne Yeda, the Director General East African Development Bank, Mr. Jay Finkelstein, DLA Piper Project Leader

Speaking at a high level seminar for Public Sector Lawyers and Law Professors in Dar es Salaam, Tanzania, Hon. Pinda observed that well drafted and carefully negotiated Mining Exploration and Development Agreements was the key to successful projects within the natural resources sector. He said a win-win arrangement between Governments and private companies seeking to develop projects in the sector in the context of Mining Development Agreements and Production Sharing Agreements were critical to Africa’s development.

“Some ill-conceived Mining Agreements have in the past led to public outcry forcing governments of affected Countries to seek redress through re-negotiation. Unfortunately, re-negotiation is often a difficult, virtually impossible undertaking,” said the Prime Minister.

Hon. Pinda said ordinary wananchi are major stakeholders in the mining business and most of them have been custodian of such resources for many decades. Thus, he added, they must be put into consideration when negotiating contracts. He asked lawyers to distance themselves from bribes and ensure fairness in the natural resources sector.

He regretted that Africa remained poor in spite of having huge resources partly because of badly negotiated mining agreements. Only one third of mining contracts, he said, benefit the African continent. He suggested African countries should stop granting tax exemptions to foreign firms so that they could pay tax accordingly and contribute to economic development.

Speaking at the same meeting, EADB Director General, Vivienne Yeda, observed that the discovery and ongoing exploration of various minerals in the region has raised the expectation of host communities and governments that resource extraction will result into wealth creation, reduced budget deficit and improve the conditions of the local people.

“It is critical that host countries are able to derive tangible benefits from the exploitation of their natural resources. The benefits should accrue to the local communities in form of appropriate royalties, taxes, dividends, business opportunities, professional jobs and employment for skilled labour, said Ms. Yeda”

Ms. Yeda further noted that there should be a clear benefit to the country, commensurate with the amount of resources derived from the country. In order to achieve this, taxes and other fiscal rates, environmental and social management in Africa should be comparable to those prevailing in advanced economies and should comprise best practice. Stabilization clauses should be used in very specific and clearly defined circumstances and for a limited duration only.

She added, “Africa should adopt dynamic and creative fiscal regimes that can be adapted to changing economic and social circumstances. It is a continuing puzzle and challenge to all of us that there is a negligible number of African owned companies in the natural resources sector more than 100 years after resources such as gold and diamonds were discovered. Local communities have largely participated in the sector in artisanal and small –scale mining. With this new discovery of minerals we hope that African owned companies will begin to emerge and to develop the capacity to invest and develop large scale projects in the sector. We would expect initially at the very least, to see some value addition taking place locally and, subsequently, in the mid-term , to see local entrepreneurs develop projects and seek funds internationally to finance the projects, particularly in mineral, oil and gas sectors.

The training seminar is organised by EADB and facilitated by global law firm, DLA Piper and her non-profit affiliate, New Perimeter. It is designed for public sector lawyers and law professors involved in negotiating transactions and drafting agreements for on behalf of Government in extractive sectors and other large scale projects and is the second to be held in the region this year after the inaugural one held in Kigali, Rwanda.

The Dar es Salaam seminar brought together senior public sector lawyers from Kenya, Tanzania, Rwanda, Burundi and Uganda. Seven senior corporate transactional lawyers from five different countries are facilitating the five -day training.

The agreements discussed at the Seminar include Exploration Agreements, Project Finance Agreements, Production license and Production Sharing Agreements EPC and multi-contracting Agreements.

Speaking on his expectations of the five day seminar, DLA Piper Partner, Jay Finkelstein, stated: “We are very pleased to be collaborating again with EADB to continue the training we started in Kigali. The project finance analytical framework and negotiation skills that will be the focus of the training in Dar es Salaam are key to creating the working tools necessary to assure that future contracts involving key African resources contribute to a strong future by assuring fair, mutually beneficial agreements. We welcome the opportunity to work with the government lawyers and law faculty to build the skills that will contribute to this important objective.”

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About EADB

The East African Development Bank (EADB) was established in 1967 under the treaty of the then East African Cooperation. Its mandate was to provide financial and related assistance to enterprises in the member States which, by their activities, were expected to make a positive contribution to socio-economic development in the region.

The Bank was re-established under a new Charter in 1980.

Under the Charter, the Bank’s role and mandate were reviewed and its operational scope expanded to include a broad range of financial services in the Member States with an overriding objective of strengthening socio-economic development and regional integration.

EADB is today owned by the four Member States of Kenya, Uganda, Tanzania and Rwanda as well as other development and commercial financial institutions. Being an organ of the EAC and its partnership with EAC institutions has accorded it a platform to play a catalyzing role in regional integration through provision of development finance.

About DLA Piper

DLA Piper is a global law firm located in more than 30 countries throughout the Americas, Asia Pacific, Europe and the Middle East.

About New Perimeter

New Perimeter is a nonprofit organization established by global law firm DLA Piper. Its mission is to provide long-term, high-impact pro bono legal support to qualifying nonprofit organizations, governments and academic institutions. New Perimeter focuses its work on legal education, women’s and children’s rights, access to justice and law reform, environmental protection, economic development and food security.

About IMMMA Advocates

Ishengoma, Karume, Masha & Magai Advocates (IMMMA) is part of DLA Piper Group, an alliance of legal practices, with offices in Dar es Salaam and Mwanza.

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