Capacity building workshop on negotiating natural resources contracts

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Negotiations require preparation and there should be a structured process on how to approach negotiations, emphasized the African Natural Resources Center (ANRC) Director, Sheila Khama. Addressing a cross-section of natural resources experts at a seminar convened jointly with the African Legal Support Facility (ALSF) on 19 July 2016 in Abidjan, Cote d’Ivoire, the aim was to draw attention to the complexity of contract negotiations and dialogue on the importance of good governance in negotiations between African countries and investors. Both ANRC and ALSF have been established by the African Development Bank.

Why do governments need to understand the context in which negotiations occur? Industry factors, the authorizing policy, institutional and legal environment must be understood because governments will be in a better position to translate these internal and external factors into a coherent mandate to support the development of a negotiation strategy and an action plan underpinned by competent teams, explained the ANRC Director. This is key to effective negotiations, she stated.

Discussing the role of a sound legal environment, the ALSF Director, Stephen Karangizi expounded on the legal challenges that many African Governments face when negotiating complex contracts with investors. He highlighted some of the challenges which include: weak legal and regulatory frameworks; lack of specialized knowledge; asymmetry of information with respect to key variables of transactions, relevant fiscal and legal tools; high staff turnover in key government agencies and difficulties in retaining qualified and experienced staff.

He added that the African Mining Legislation Atlas and are online platforms the ALSF is supporting to promote transparency and accessibility to information. In the context of individual unique challenges that many countries face, access to information is important and these online platforms are intended to catalyze research and policy debates on legal and regulatory issues, he added.

In the ensuing discussions, participants shared their individual experiences reflecting a myriad of challenges that may be attributed to a skills gap in the public sector, particularly in contract negotiations and weak institutional systems.

Participants also explored avenues through which systems of cooperation, knowledge learning and exchange can be institutionalized to support and enhance the implementation of AfDB’s Ten Year Strategy refined by the High-5s –the five operational priorities recently approved by AfDB’s Board of Directors.

AfDB staff members suggested the establishment of a core team of negotiators who can partner with sector specialists on a need basis as a means through which African countries can institutionalize knowledge exchange and learning. The implementation of the same idea should be explored within the AfDB with the support of the ANRC and the ALSF to build internal capacity in the area of contact negotiations.

Recognising that natural resources revenues have the potential to contribute to Africa’s transformation but that the ability to negotiate fair deals is a critical missing link the ANRC and ALSF have put negotiations at the centre of the collaborative efforts. At present, the ANRC and the ALSF are working together to institutionalize knowledge and strengthen the capacity of African countries. Explaining the approach Sheila Khama said “In addition to strategic and tactical considerations, knowledge of global industry structures and the economic value of the assets being negotiated is essential for strengthening the bargaining position of the African countries. The trust that countries have in AfDB is ANRC and ALSF’s distinct value proposition”.

This week’s session was the latest in ANRC’s series of monthly knowledge seminars which are intended to contribute knowledge and foster an enabling environment for the implementation of the AfDB’s Ten Year Strategy and High 5s. In line with the focus of the Center’s contribution to the H5 priority areas, a number of external seminars are also planned in Morocco (mining), Benin (fisheries), Kenya (land) and Ghana (forestry).

The next ANRC internal knowledge seminar will be held in August on the subject of “combating illegal fishing”.