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Briefing

INSIDE

FEATURE: SOCIETY & CULTURE P.56


Working from home is becoming more popular because it is cheaper, convenient and more comfortable. Unlike working from the formal oce environment, there is very little supervision.

Insights
IDEAS

Turning a resource curse into opportunity


British economist Paul Collier, and author of The Bottom Billion and The Plundered Planet, gave the keynote lecture at the Thomson Media Foundation training. He outlined the FIVE steps Kenya can follow to avoid the oil curse. The whole chain from step 1 to step 5 has to go right, and for a whole generation, if Kenya is to pull itself out of poverty. Kenya has approximately ve years before the oil comes out of the ground and this time needs to be used to build capacity for investment, to scale up existing investments and not to consume. For instance, Ghana is saving 30% of oil revenues for future generations. Norway did a similar thing. They invested in pre-school education. As Kenya gears up for national elections, our political parties need to commit not to how much they will spend but how much they will invest.

Analyse information
Be vigilant about the resource discovery process. There are good and bad ways of discovering resources. Good practices are to gather and analyse geological information, so that the government is properly informed before it begins negotiations with extraction companies. Rule of thumb: Dont sell prospecting rights at once and dont sell them without time limits. Use a competitive and transparent process.

Value the resource


Capture the value of the resource for society. Resource extraction doesnt generate jobs for the host country so the country needs to generate value for itself by developing and implementing a good tax system. How can one eectively harness natural resources? Set up rules to ensure sound economic decision-making and build dedicated institutions to help reinforce the rules. Rule of thumb: A good tax principle is taxation that you can observe, he says.

Take care of locals


Resources under the ground are a sovereign assets belonging to all citizens, and the prots should be shared. Local communities should not have the right to veto a decision on resources; avoid a repeat of the Niger Delta. All environmental damage should have full, generous and reliable compensation. Rule of thumb: Set up a system for credible compensation, and then allow full and transparent participation in benets by all citizens.

Think of prosperity
Balance the benets to the present generation and the benets to the future generation. Create a critical mass of citizens who know and understand the rules and issues. Resource discoveries will not last long. For instance, Ugandas oil wells have been projected to last for around 25 years. Rule of thumb: The proportion of assets that is dedicated to savings and investments should be balanced with the proportion that is invested in consumption.

Assets to acquire?
Norway handled the discovery of oil very well. It bought foreign assets. This was a sensible decision for them because the country already had enormous capital investment, but it would be foolish for Africa which needs capital locally. Africa needs to build the capacity to invest well. Rule of thumb: conduct a cost and benet analysis on every project. Look at design, selection, implementation and, most importantly, evaluation.

Compiled by Aamera Jiwaji | Nairobi Business Monthly June

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