When a new power project comes to town, local communities are invariably impacted. While there may be benefits such as local job creation and business growth, each power project—big or small— brings concerns about land use and acquisition, resettlement, environmental impacts, health and safety, benefit sharing or an influx of outsiders into an established community. These concerns can quickly manifest into conflict if not addressed properly.
Having witnessed setbacks to many power projects due to conflicts with communities—some temporary but costly, some which ended up cancelling projects altogether—there is conclusive evidence that developers who partner with local communities from the early stages of the project cycle are the ones most likely to “get it right.”
A power project reaches financial close only after the developer has demonstrated project feasibility and commercial and financial viability, including environmental and social assessments, land surveys, power purchase agreements, and government approvals and permits. Most of the significant project risks must be mitigated by the time a project reaches financial close or investors would not otherwise put their money into these deals. Often the most difficult aspects of closing a power deal are securing the financing and finalizing the necessary agreements with a host government.
Repeatedly, private sector stakeholders point to the length of time for projects to reach financial close as a significant barrier to investment. There is an enormous opportunity cost—especially for developers who place their own equity and resources on the line—to operating in an environment where financial close takes significantly longer than in alternative emerging markets.
One major stepping stone in reaching financial close is often underappreciated, under-funded, and under-staffed: attaining and maintaining “social license” from host communities and other project-affected persons (PAPs).
Social license can be defined in a variety of ways in both explicit and implicit fashions. In general, it refers to the ongoing acceptance of a developer's business and operating practices by the general public. Social license to operate is attained and maintained slowly over time as the actions of the company build trust with the community it operates in and other stakeholders. Social license can sometimes also be referred to as “No Objection” – indicating that the community does not object to the project from going forward.
Challenges to Attaining Social License in Kenya
In a study commissioned by Power Africa, key challenges to attain (and maintain) social license in Kenya have been identified as follows:
- Political interference by elected leaders;
- Community rousing by individuals aiming for elected public office; (elected positions);
- Changes in community leadership resulting in overturning or delays in decisions made with the community;
- Conflicting expectations between a community and a developer;
- Poor relations between a developer and a community;
- Lack of prioritization of community engagement by developers;
- Inadequate risk identification and analysis at project planning stages;
- Poor change management with regard to staff turn-over;
- New or increased demands on a developer from the target community, other stakeholders relevant to community engagement or other (emerging) communities within the project environs;
- A stakeholder group that was left out of the preceding stakeholder or community engagement program can self-mobilize or be mobilized by a human rights group to protest against a certain aspect of the project;
- Misinformation and rumors about a project among community members;
- Public relations crisis over community engagement issues;
- Lack of trusted and / or reliable leadership within a community;
- Litigation by the community; and
- Poor understanding of a project and its expected impacts leading to project rejection or delays in receiving community consent to proceed with the project.
Community engagement can be defined in various ways, but robust community engagement includes the dissemination of information, targeted consultation with local leaders and representative groups, collaborative decision-making, and even community co-design of project components, particularly when a project requires resettlement and also for any coporate social responsibility (CSR) and corporate social investment (CSI) towards community development initiatives. It means the engagement of communities in a way that truly respects their history, traditional knowledge, cultural norms, relationship with the land on which they live, the natural resources they utilize, their legal and human rights, and their development needs and aspirations.
This definition can be referred to as working in partnership with communities, incorporating the aspects of collaboration, negotiation and empowerment to foster collaborative decision-making and empowered action with community consent and partnership as the key outcomes.
Robust community engagement is also a means to foster mutually beneficial and sustained relationships between the company and the community, with continuous feedback loops at each project decision-making stage, from project feasibility studies to construction, and through operation and de-commissioning.
It is important to keep in mind that community engagement is a process, not an outcome or a solution. The objectives and parameters of any engagement processes need to be stated in a transparent way to avoid creating unrealistic expectations in a community. Indeed, the management of community expectations is perhaps one of the most important aspects of this process, starting with setting realistic expectations with the community at the onset so as to avoid the community having unrealistic and unattainable expectations.