Latest update April 20th, 2024 12:59 AM
Oct 12, 2022 News
By Kiana Wilburg
Kaieteur News – Since coming into being in December 2021, Guyana’s Local Content Legislation has been lauded for its potential to increase citizens’ participation in the oil and gas sector.
In fact, the law ring fences 40 categories of work for which oil companies must use Guyanese services. While this in itself is commendable, it is possible that the law can be used as a vehicle for an equally noble task—generating wealth in disadvantaged communities. Making this argument is New-York Based Lawyer Dr. Vivian Williams. He posits that Guyana has a glorious opportunity to ensure companies have local content targets for employment and training in disadvantaged/vulnerable communities.
In one of his commentaries first published by Demerara Waves, Dr. Williams said local content provides an opportunity for Guyana to address social and political issues that hamper its development. One key issue, he said, is the gap between the wealthy and the poor. He said using local content to address this could deescalate tension by creating a more inclusive society.
Expounding further, he contended that this is not a novel approach since many countries provide for inclusion of historically disadvantaged groups in the ownership, management, and employment structure of companies. For example, Dr. Williams said South Africa’s Broad-Based Black Economic Empowerment programme (BBBEE) gives preferential treatment to Government tender offers made by companies that partner with local black-owned entities. Additionally, South Africa’s Competition Laws provides for a greater spread of ownership, to increase stakes of historically disadvantaged persons.
Also, he said the Organization for Economic Co-operation and Development (OECD) notes that, South Africa is among a string of countries that “consciously attempt to correct structural imbalances and past economic injustices…”
He said too that diversity, inclusivity, and belonging have therefore gained significant traction in recent times. More and more, he said Governments are taking up lead roles in advancing the agenda for diversity in the ownership and generation of wealth.
In the United States, Dr. Williams said the Federal Government and States create an environment for diversified wealth ownership through preferential treatment in procurement of firms that meet diversity and inclusivity thresholds.
Given the difficulties in raising capital locally, Dr. Williams said dominant firms and groups are likely to find it easier to put together a 51 percent equity stake. Therefore, Dr. Williams said providing for diversity would ensure that entrepreneurial opportunities in the oil and gas sector are not dominated by entrenched businesses and dominant firms that would move swiftly to establish conglomerates.
He said, “Instead of developing corridors of wealth, local content could be used to stimulate entrepreneurship in disadvantaged communities. Firms could be incentivized to set up innovation labs, entrepreneurship incubators and offices or production facilities in non-traditional business zones.”
Furthermore, Dr. Williams said the opening of businesses in disadvantaged communities could spur entrepreneurship and reduce unemployment in these communities.
In concluding, Dr. Williams said the effects of failed local content policies often become evident several years after implementation, by which time, social and economic ills that lead to failed states, have taken deep roots.
In Guyana, he said stakeholders started to see two signs emerging simultaneously. The first is the emergence of the seedlings of conflict. Second, is that businesses have started turning the local content law on its head.
With this in mind, Dr. Williams warned that Guyana should not wait until it is too late; if there is an unwillingness to listen and make tweaks along the way, “we could soon see the local content law walking on its head.”
Where is the BETTER MANAGEMENT/RENEGOTIATION OF THE OIL CONTRACTS you promised Jagdeo?
Apr 20, 2024
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