Extractive Industry Conference for Government Lawyers – Kigali, Rwanda

Remarks by the EADB Director General, Vivienne Yeda

Hon Johnston Busingye, Minister for Justice and Attorney General of the Republic of Rwanda

Hon Claver Gatete, Minister for Finance and Economic Planning, Republic of Rwanda

My Learned Friends from across East Africa

Distinguished Faculty Members of the Seminar

Distinguished guests

Members of the press

Ladies and gentlemen

East Africa today stands on what I would call the period of ‘economic tipping point.’ The last decade has seen the discovery of minerals such as coal, gas, oil, titanium, among others, across the region.

These discoveries have the potential to turn around the economic fortunes of the region, forever. The men and women gathered in this room may not have the master key to open the door to the main room of opportunity but you hold in your hands the keys to the outer lounge. You have the power, the influence and the skill to deliver a good beginning.

The fundamental question we must ask today is whether the region will benefit from its resources, going by the experiences of other resource-rich regions of Africa and the Middle East.. Can East Africa ensure that the newfound riches are converted into tangible wealth for the states and the majority of its people?

The answer to this question, and I know you will agree with me, is in the affirmative. Yes it is possible but not obvious.

This seminar, therefore, is designed to build the capacity of government lawyers involved in negotiating deals and agreements for the extractive industry resource transactions and putting in place effective policy frameworks.

The objective is to assist countries in the region in the wake of these resource discoveries to correctly structure transactions and related policy, thereby reducing the risk of costly or legally complex remedial measures at later stages. To accomplish this objective, the government negotiating lawyers should have the capacity to advise and mentor national teams involved in the negotiation of contracts. The expected outcome is to level the playing field to ensure the region and its citizens benefit from the exploitation of extractive resources.

The first fundamental issue we must come to grips with is foreign private investors’ dual search for investment stability on the one hand and profit on the other. These commercial interests have to be balanced against the strategic interests of African governments, given the socio-economic context of oil and mineral exploitation in the East African region. This critical balance needs to be well agreed and documented. The pillars for balancing these interests are to be found in the applicable fiscal regimes of the respective countries.

The other overarching issue that concerns us directly is the environmental impact of extractive industries. The extraction of non-renewable resources such as titanium, gold diamonds and crude oil has had serious consequences on the local communities and environment. Lawyers involved in negotiating, structuring or drafting international business deals must ensure that the indicators of sustainability—encompassing economic, environmental and institutional dimensions are envisaged and incorporated in the agreements to protect the livelihoods and social welfare of local citizens.

Finally, but in no way the least, are the conflicts that arise post conclusion of international business deals. Throughout the lifetime of a project, three sets of structural pressures tend to challenge the concluded international business deals. First, commodity price cycles can undermine existing contracts and challenge their legitimacy. Second, ideological shifts and transitions of power, often trigger demands to renegotiate deals. Third, the changing distribution of bargaining power over the project cycle may embolden action by one or other party. To manage these issues, flexible contractual arrangements with built-in response mechanisms should be incorporated in the deals.

Ladies and gentlemen, colleagues, the scramble for Africa’s resources has often been associated with conflict and other problems rather than prosperity for citizens. Further, few African countries process their own mineral resources. Rather, the value addition is often done elsewhere, ensuring that the accruing benefits continue to elude Africans.

The narrative across East Africa in the wake of oil and gas discoveries has been mixed but many have adopted a wait and see attitude. While some are hopeful about future economic prospects, many are worried about the problems that may result from the exploitation of these resources.

This Seminar will be the beginning of proper discourse and concrete measures to chart a new course with regard to the economic fortunes of our region. I hope to see all of you and others at future seminars as we seek to build regional skills and competence.

Thank you for your attention.

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