#KE 2018 Local Content Bill, A Big Try?
Compared to this 2016 version, the #KE 2018 Local Content (LC) Senate Bill, is a big improvement. This is why.
The bill realigns allocation and management of local content interests related to an extractive activity to a structure that is inclusive of both national and county governments. It requires annual disclosure of long term and annual work programmes and budget for LC by the extractive operator. While the bill attempts to clarify roles and obligations of both levels of government, there is still room forward. The bill improves collaboration weaknesses in allocation. management and reporting of LC interests between the two levels of government, and but not between county, sub-county and communities. The bill recognizes county public participation structure as tools for involvement in extractive activities.
#KE has struggled with devolution of management of LC interests in national investments to achieve more equality with sustainable development. Absolute poverty level of around 50%, with increased awareness, and connectivity, host communities strongly pushing for economic opportunities. Communities hosting mining and petroleum investments have high expectations for LC to deliver opportunities that improve their wealth in fairly distributed, well informed and accessible jobs, contracts, even with varying capacities. This LC Bill provides a snapshot of where #KE is, in this negotiation.
The bill has gone through several version lives in the context of interpretation of relations between national, county, company and communities. Let us give credit where its due. The 2018 version has some great leaps, which if adopted will create the collaborative environment for strong economic progress.
The bill bases roles of county and national governments on their constitutional mandate. This is critical but also may end up being messy and benefit elites, if clear lines of collaboration are not highlighted. Functional collaboration between national and county government officers has been and is going to be a tie breaker for fair LC from large scale investment. The establishment of an inclusive Local Content Development (LCD) committee, is walking the right path. The two representatives from county of governors is a step, which some think its too low especially if they end up without requisite knowledge in extractives.
On fair sharing of LC interest, this improves interpretation of the constitutional mandates but not far enough. County governments have constitutional mandate as delegated local government participation should be further expanded in managing LC interests of an extractive investment. Extractive activities have significant impact on livelihoods and their local ownership improves if decisions are perceived to be participatory.
A company investing in a ward/sub-county/county will have to negotiate and declare a package of LC value of the investment and share it with the committee. The LCD Committee will then share it between national and county(s) stakeholders. County governments will do the same for sub/county(s), ward(s) as representing communities.
#KE local governance structures are still work in progress, it would have been prudent if clarity is brought to how much goes to each sub/county(s) and ward(s) level. Numbers are better tie breakers. Remember local content is NOT and should not be considered the same as revenue sharing, which sets 20% county and 5% sub/county long been negotiated. Counties need to start the sub/county and ward LC share allocations debate. Should some minimum/targets for sub/county and wards be set in this bill or should we have some guidelines or should we trust counties to set them?
The cabinet secretary (CS) in consultation with the LCD committee (whose functions include identifying the “value-addition opportunities existing along the extractive supply chain industry”) sets a LC minimum. This becomes a clearer milestone-based progressive negotiated performance measure. Should these minimum target (in value) be extended to sub/county and wards in county(s) hosting an investment?
The CS minimums provides basis for sector specific minimums/targets that all including players (the operator, LCD committee and county government), pursue and report on an annual basis. Capacity building, enterprise development and facilitative obligations are then implemented, monitored and reported based on a negotiated minimum/target. Performance and reporting obligations should therefore be expected and reported equal by all in a triangulated manner including by and reported by website of the secretariat.
An operator shall prepare long term project and annual programmes and budget, setting out an estimate of the local content component of the extractive activity. This; a) gives a clearer expected LC value; b) be used by LCD Committee/county government to set targets for the extractive activity; c) be shared with sub/county and wards during public participation; d) be Published information; e) be the basis for monitoring and reporting on Local Content Plans (LCP) and should include by “fairness of distribution” on LC interest.
For each extractive activity, it would be easy for host community stakeholders (youth groups, women groups, elders and PWDs) to know before hand, “what is the LC value, the LC targets and commitments of county governments, the reporting requirements and the efforts all need to achieve. County governments may now be obligated as part of public participation, to highlight to sub/county and wards hosting extractive activities, What LC plans, targets (by sectors, value and obligations) and how its going to try to achieve by enterprise development, opportunities available, sharing plan, and allocation of facilitation by county government to youths, women, elders and PWDs.
The county government will also be able to openly allocate, what LC activities can be done jointly with national companies for local companies to learn as part of enterprise development. What will be allocated to ward, sub/county and what will be done jointly between county elites and community groups and what will be done with national companies.
This is not splitting hairs, equality targets cannot be achieved if we leave elites to compete in the market place with community groups or host national companies with sub/county ones.