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CSR in the Oil Sector in Angola:
World Bank Technical Assistance Study
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3. CSR issue #1: “Angola content”
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This subject breaks out into two categories: Angolanization and development of the local supply market.
Angolanization:
Since 1982, and consistently through the years, the GoA has passed legislation to set targets for the hiring of local labor to which the foreign oil companies must adhere. Between 2002 and 2010, oil companies will be required to increase their Angolan staffing from 70% to 90% of their workforce operating in Angola. This process is referred to as “Angolanization”. The staffing targets are based on worker grades: (1) 100% Angolanization will be required for unskilled workers, e.g., drivers, janitors, etc., (2) 80% Angolanization will be required for mid-level workers, e.g., travel agents, machinists, etc., and (3) 70% Angolanization will be required for higher level staff, e.g. managers, geologists, engineers, etc.
While many companies have already achieved compliance with the unskilled worker target, they are having more difficulty complying with the targets for higher level staff. There is a shortage of skilled and adequately trained labor in Angola. Several oil companies have programs in place to train mid-level and higher-level staff at universities in their home countries. After completion of their studies, a number of trainees choose to stay abroad where they may find more options to succeed. The others return to Angola and are employed by the companies. In absence of reliable data on the percentage of returning students, oil companies continue to promote this type of expensive programs, while stating that they do so because of the absence of cost-effective opportunities to train their staff locally.
On the other hand, there is an overall consensus and building momentum amongst oil companies, the government (with the Ministry of Petroleum leading the charge) and other development institutions for a comprehensive approach to the problem of development of human capacity, skills and training, for Angolans both rethinking the strategy of sending students abroad as well as improving the educational infrastructure in Angola. While some are focused on the need for skills directly related to the oil sector, e.g., petroleum engineering, geology, seismology, etc., others see the benefits of building a broad and diverse skills base, including general mathematics, sciences and business training as well as more technical trade skills like shipbuilding, welding, etc. This training would support the oil services sector as well as other potential growth sectors for Angola.
The Ministry of Petroleum and Sonangol are chairing a consortium of government and private sector players to address the issue of Angola Content. It began in February 2002 and meets monthly. A report is expected in early 2003. Representatives from the Ministries of Petroleum and Industry made a speech in Houston on October 21, 2002 about the need from more Angolanization in the oil sector.4
Several people identified a role for the World Bank CSR Team in supporting sustainability efforts. Whilst the World Bank does not necessarily endorse the Angolanization targets, it could serve as a catalyst for long-term investment in the education and training of Angolans. It is critical that the skills identified are potentially transferable to other industry sectors, if this is to be in the long-term development interests of Angola. The Bank may also have a role to play in encouraging the use of core complementary competencies in this collaborative process. If the program agenda is carefully designed so that it reflects the goals of each sector and employs the most appropriate resources that each can bring to bear, this will contribute to a mutually advantageous, win-win proposition. It will be far less successful if companies feel they are being forced to comply with artificial and arbitrary government imposed standards. Companies could potentially spend more time and effort looking for loopholes than looking for ways to contribute to a common vision.
Local Sourcing:
Another key issue which companies and government agree on the importance of, is the development of a local supply market in Angola. It is common practice for oil companies to import everything they need from the buoys that hold their platforms steady to the oil tankers to the food their staff eat and the water they drink. They simply cannot find high quality, cost competitive goods and services to procure locally, if they exist at all.
Several factors contribute to the underdevelopment of local business: 80% of Angolans are employed in the informal sector; small businesses have no access to capital; the majority of entrepreneurs have few skills, low educational levels and no previous business experience; there is no justice system in place to deal with commercial interests, land rights, etc.
People talked about the importance of building the capacity of downstream operations, instead of just upstream capabilities. Local supply markets need to get into the maintenance business of oil blocks. This will be a longer-term endeavor than directing all capacity towards the construction of oil blocks, which will have a finite duration.
We understand that the Angolan Chamber of Commerce is working on the issue of Angola content by bringing together local services companies. While we did not get the opportunity to meet with them on this trip, we consider them a potential partner on this pilot.
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Footnote:
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Augusto Alfredo, “Petrуleos procuram maior angolanizaзгo do sector”, Jornal de Angola: Economia, p. 9 (see Annex 4).
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