Leaders should not be mere observers of rush for E Africa

An attendant arranges gas cylinders at a Nyeri petrol station on May 22, 2013. East Africa has an infant oil and gas industry, which is envisaged to propel it into the middle- income group. FILE 

By Paul Kibuuka

In Summary

• East African leaders ought to enact policy on local content in oil and gas exploration and prop up citizens.

East Africa’s increased attractiveness to international investors and multinationals has sparked a scramble for top corporate lawyers by the world’s leading legal advisory firms hunting for new revenues in frontier markets.

This calls for local legal minds to understand the intricacies of such global contracts.

Therefore Chambers Global Guide, which ranks the world’s leading law firms and attorneys based on client feedback and peer input, is likely become busier moving forward.

Chambers Global is unique among legal directories in that its rankings are based on conclusions of independent researchers based in London. They review material submitted by law firms, interview clients and consult public filings on transactions that the companies have worked on.

As the Business Daily reported recently, already about 10 of the top 16 global law firms have inked partnership deals with the region’s top corporate law firms, according to the International Financial Review 1000 (IFRL1000), a research company that ranks global legal houses.

The research indicated that 12 international firms are active, aiming for an edge in bidding for legal tenders in projects located in eastern Africa.

The rising interest in the region is linked to the recent trooping to the region of foreign investors chasing multi-billion shilling infrastructure deals, legal work for multinationals with regional operations, and natural resource projects — especially oil and gas exploration deals.

These activities are generating millions of shillings in legal fees, making it critical for top international firms to have a local footprint.

However, as the big boys in the extractive sector come into the region, the move calls for increased capacity in legal handling of deals. For example, last year investors’ eyes were focused on Turkana county over the discovery of oil and Mtwara region in Tanzania.

Mtwara, hitherto considered among the poorest regions in the country, came to the limelight following the discovery of massive natural gas reserves.

Several billions of shillings were expected to flow into Mtwara for the exploitation of gas deposits.

Investment in gas exploitation in the area is expected exceed $1 billion after two years and top $9 billion within the first 10 years. Discovery of vast deposits of natural gas has the potential of lifting Tanzania from the category of least developed countries to a modern and prosperous economy.

As events unfold, there is need for strong linkages between the extractive sector and other sectors.

East Africa has an infant oil and gas industry which is envisaged to propel the region into the middle income group. This will only be possible if there is a significant amount of financial resources which can be invested to stimulate activities in the industry.

The circulation of financial resources will lead to a multiplier effect hence contributing to the GDP growth of East African countries. It is a fact that the region’s local supplier base is yet to meet optimum standards of the oil and gas industry.

This situation calls for increased efforts by both governments and the industry to develop the local supplier base so as to ensure that locally owned firms can efficiently and effectively participate in the oil and gas supply chain.