EXTRACTIVE INDUSTRY CONFERENCE FOR PUBLIC SECTOR LAWYERS AND LAW PROFESSORS
DAR ES SALAAM, TANZANIA, SEPTEMBER 9, 2014
Remarks by the EADB Director General, Vivienne Yeda
THE Rt. Honorable Mizengo Kayanza Pinda, Prime Minister of the United Republic of Tanzania,
Hon. Mwigulu Lameck Nchemba Madelu, Deputy Minister for Finance, United Republic of Tanzania;
Mr. George Masaju, the Deputy Attorney General;
Dr. Servacius Likwelile PS, Ministry for Finance, United Republic of Tanzania, and Member of the EADB Board of Directors;
Mama Khadija Simba, Managing Director, Kays Industries and Member of the EADB Board of Directors;
Mr. Jay Finkelstein, DLA Piper Project Team leader;
The Distinguished Faculty members;
Distinguished Delegates, Colleagues, members of the media fraternity
Ladies and gentlemen,
Let me take this opportunity to welcome you to the second seminar on developing and negotiating contracts within the extractive industry sector.
Rt. Honourable Prime MINISTER, I wish to thank the government of and the people of Tanzania for the warm welcome and cordial hospitality accorded to us in the beautiful and historical city of Dar es Salaam.
This seminar brings together senior public sector lawyers from Kenya, Tanzania, Rwanda, Burundi and Uganda. It is the second after the inaugural seminar held in Kigali and attended by more than 40 public sector lawyers.
This seminar will discuss in detail important transaction agreements including Exploration Agreements, Project Finance Agreements, Production license and Production Sharing Agreements EPC and multi-contracting Agreements.
EADB continues to host these seminars in order to develop our capacity as a region and also to ensure that we are kept abreast of the latest negotiating strategies.
The discovery and ongoing exploration of various minerals in the region has raised the expectation of host communities and governments that these resources would translate into wealth, improve foreign exchange earnings, reduce budget deficits and improve the living conditions of the local populations.
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 and regional communities in the form of appropriate royalties, taxes, dividends, business opportunities, professional jobs and employment for skilled labor. There should be a clear benefit to the country commensurate with the amount of resources derived from the country.
While these are legitimate expectations, the reality is very complicated and therefore, deliberate and determined efforts have to be made to ensure transparency in the contracting process, to eliminate transfer pricing, prevent manipulation of prices and tax evasion, to ensure best practices in employment and the management of the environment so that benefits may accrue to the local populations
Public sector lawyers play a central role in the management of the extractive industry by providing quality advice to their governments, drafting and negotiating concession agreements and other project finance documents. This is the reason that it is important and urgent for lawyers to keep abreast of the latest developments in project financing, to monitor implementation of the projects, to ensure integrity in the management of projects, and to secure the benefits from the development of natural resources for their countries.
It is your duty as government lawyers to achieve a balance in the transactions concluded and ensure value for money for their countries.
Why is it the case that very often African Governments receive insignificant royalties, low tax revenues, and certainly no dividends? Why have environmental and social standards been very low in Africa?
To address this, tax and other fiscal rates, environmental management should be comparable to international standards and best practice. Stabilization clauses, may, if necessary, be used in very special and clearly defined circumstances, and for a short time only. “Africa should adopt dynamic and flexible fiscal regimes that can adapt to changing economic and social circumstances”
Governments are duty bound to build institutional and managerial capacity to administer complex financial schemes, including incentive schemes, to ensure that these schemes are not manipulated by resource companies for their financial benefit. The expansion in resource exploitation should be matched by a corresponding increase in enforcement of regulatory standards.
It is a continuing challenge that there a dearth of African companies in the natural resources sector more than a hundred years after mineral resources like gold and diamonds were discovered in Africa. 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.
We all have a duty to secure the best investment agreements for our continents and our countries.
Finally, My Learned Friends, I wish you all a productive and pleasant stay in Dar es Salaam. We have much ground to cover in the remaining four days and I hope you will learn as much as you can, ask as many questions as you possibly could and start practising what you have learnt when you return home by sharing it with your colleagues. The exchange views and ideas should continue among yourselves after this Seminar. As we all know learning is a continuous process, one is never too young, or too old, or too learned to learn something new.
That’s the only way we can build a body of knowledge and establish capacity in the region for future generations.