At Nordea we believe that the relationship with local communities is key to any investment. But it is not always easy to determine how companies approach this and what the short and long-term effects will be for the local population. This is very much the case with the on-going quest for oil on the African continent.
Oil deposits in African countries such as Kenya can potentially be a great business opportunity for investors and a financial boost to the local economies. Increased revenue, more jobs, a brighter future. But there is also a range of possible risks that we have to pay great attention to as potential investors.
Economic opportunities go hand in hand with increased responsibilities towards local communities and the oil companies involved need to acknowledge this and deal with it properly.
This covers everything from adequate infrastructures and water resources to providing protection. In Africa, this is a key issue. Political tension and tribal conflicts mean that there is often a need to protect drill sites and the people who work there.
And then there is a range of environmental and social challenges related to the people that live next to the drill sites. As you can understand, local populations have high hopes and the potential is enormous. Therefore, it is important that the oil companies have a plan for handling the risks related to the social development.
As Keith Hill, CEO of Africa Oil, points out:
- At the end of the day, it doesn’t matter if we find a lot of oil and none of the benefits go to the population of Kenya, we have failed. The real goal is that everyone should enjoy the wealth of this oil.