Together they discuss the importance of Corporate Citizenship within African oil and gas activity, and outline the ways in which companies, governments, NGOs and consultancies can achieve a mutual benefit by working together.
Africa’s oil and gas boom shows no sign of reaching a crescendo just yet. The East Coast is teeming with fresh activity in gas, while the West Coast markets have been steadily maturing over the past 15 years. Sub-Saharan and South Africa look set to repeat these successes as they open up to early-stage licensing. But what’s the overall picture in terms of sustainability?
How are Africa’s governments using their newfound wealth for the benefit of their respective nations? Anthony Lobo, Partner and Head of Oil & Gas, KPMG in the UK, believes that thinking differs from coast to coast. “I think there’s definitely a view with East Coast Africa that the countries are looking at what’s the right model for maximising the wealth for the nation,” he says. “In terms of West Coast Africa, have had production and wealth flow into their countries for such a long period of time that they’re constantly looking at some of the existing challenges that are there.”
Opportunities and challenges
Oliver Kemp is CEO of Build Africa, an international development charity that focuses on supporting the education and livelihoods of children and young people. He believes that directing the stream of wealth coming into the continent is both an opportunity and a challenge. “If you look at the gap between rich and poor in West Africa, you can see that there have been massive challenges about money coming into the country,” he says. “You can look at countries across West Africa, and see that gap, and see what problems that’s created. We predominantly work in East Africa, and I think that people see that opportunity. You can talk to rural people working out on the edge of Lake Albert and they see that there’s potential. There’s a black goldmine sitting underneath them. They’re thinking, ‘How come this wealth isn’t coming to us?’ These are rural people earning under a dollar a day.”
A cooperative approach
When one considers the possibility of each party drawing upon the other’s proficiencies and resources, an interesting paradigm begins to emerge: a three-way forum between the NGOs, the IOCs and their accompanying consultancies, and the governments. Should oil companies and NGOs therefore be focusing on building government capacity, enabling those governments to make a greater contribution to the forum? “I think so,” says Kemp. “There are a whole variety of different models, and you’ve seen a number of NGOs now applying quite a private sector model establishing private schools and building private health clinics in Africa.
I don’t think that’s the final solution. Actually governments have a responsibility for that. If you look at the UK, for example, and most of the western economies, they’re made up of a combination of both. If you leave the governments alone then you’re going to end up with a huge swathe of people that aren’t properly serviced and don’t have the right facilities.”
Kemp adds, “The role of NGOs has to be making sure that they set that benchmark, they help develop cutting-edge innovations, they help push the boundaries and say, ‘This is how to do it truly effectively,’ but also to use that information and say, ‘If you did this, you could be 30 percent more effective with the same amount of money.’ That relationship between advocacy and doing stuff on the ground works incredibly effectively.”
However, timescale remains a critical factor here, as Anthony Lobo explains. “One of the issues that the governments will have is if you think East Coast Africa, we’re about four, five, six years away from first gas, so actually the wealth coming into the country is somewhere in the distance. In that interim period you may well have elections, changes in government. Therefore, the pressure that the government is under in order to show benefit today becomes increasingly hard. That’s one of the dilemmas the governments have, that they know that the wealth is coming. They are doing the right things in some instances around getting the right infrastructure in place, working with NGOs, working with IOCs, but unless they show enough happening today, they may no longer be around in two or three years’ time. That sustainability of government is a really important factor here around making this effective.”
Faced with the proposal of joining such a forum, some companies may lack confidence in a government’s ability to deliver, but Kemp says there is strong evidence to the contrary. “If you look at the number of governments that are transitioning from one government to the next, having free and fair elections in Africa, it’s growing tremendously. I still think there’s a long way to go. If you look at Transparency International’s index, you can see all of those countries starting to creep up quite nicely. You’ve now got countries in Africa that rank above countries in Europe. For example, Ghana is ranked above Italy in terms of Transparency International’s index. That’s an incredible achievement, if you think how far it’s come in such a short space of time. My confidence is better than it ever has been, but I’d still like to see some of them entering the top 20, rather than the top 70.”
Leading the charge
Looking ahead, it is clear that the potential exists to eradicate the long-term poverty, hunger and poor education that exists in so many African countries. Greater cooperation between NGOs, government and companies can bring that about, but who should lead the charge? Kemp believes this responsibility lies with all three parties.
“Let’s not keep our information in little silos,” he says. “The NGOs should be working more together; the governments should be working alongside us. We’re good at listening to communities. We go in and survey thousands of people to make sure what we’re doing on the ground is right. Giving that information to government, and to the large players, is important. Saying, ‘This is what we should be doing in this area, because we’ve listened to the people. We’ve modified our projects accordingly.’ Also, working with them to say, ‘Okay, well let’s work out what’s the best solution for this area in which you want to achieve change.’”
Given our skills and resources, could KPMG also take part in kicking the ball into play? Lobo certainly thinks so. “As our brand and what we do expands, this is an absolute space that we have the right skills to be able to operate. Through civil society and our work with the NGOs, we have those relationships. We work for every single independent oil company and supermajor across the globe. We work with them across many levels of their business. We work with governments in advising on how they develop their society to how they develop their economy. This is an absolute skillset that exists. Do we do it often enough? That’s a different question and that’s probably not as much as we should do. But we absolutely should be at the heart of this debate.”
To hear more from Lord Hastings, Anthony Lobo and Oliver Kemp, watch KPMG’s video interview.
Global Head of Corporate Citizenship,
Lord Michael Hastings joined KPMG in 2006 and represents KPMG International on the Global Corporate Citizenship Committee of the World Economic Forum (WEF) and was a Board Director of the Global Reporting Initiative until 2012. Since 2009, he has served on several of the WEF’s Global Agenda Councils, including Diversity and Talent, the Next Generation and the Role of Business. In 2012, he was named Vice Chairman of the Global Agenda Council – the Future of Civil Society. Michael is Chairman of Millennium Promise UK and a member of the Global Millennium Promise Board. Michael is a trustee of the Vodafone Group Foundation and until recently served for 9 years as a Non-Executive Director of British Telecom on the Responsible Business Board. He was a leading advisor to the Chatham House enquiry into the Future Role of the UK in Foreign Affairs. Michael sits on the Council of the Overseas Development Institute in the UK. In 2011, he became a Vice President of UNICEF and is President of ZANE, a development aid agency focused on Zimbabwe.
CEO Build Africa
Oliver was appointed as Chief Executive in 2010. He originally joined Build Africa in 2008 as Director of Fundraising and Communications. He was previously responsible for the fundraising teams at Education Action International and the Haemophilia Society.
Partner, Head of Oil & Gas,
KPMG in the UK
Anthony joined KPMG in 1992, after receiving his BSc in Economics at the University of Southampton. He is an M&A professional advising leading IOCs and NOCs on cross-border acquisitions and disposals. Anthony has also worked with NGOs, governments and companies across the world.
To discuss Corporate Citizenship in oil and gas further, please contact Anthony Lobo.