Domestication of the role of the mining sector in Southern Africa through local content requirements

Abstract

This paper discusses the rationale for, and use of, local content requirements (LCRs) in the mining sector. In many countries, LCRs are being used to facilitate wealth creation, local participation, domestic linkages and clusters growth, and socio-economic development linked to mineral exploitation. In the case of the Southern African Development Community (SADC), where LCRs have grown in popularity in recent years, the main strategies being pursued include quotas (equity, employment, local sourcing), local beneficiation, local supplier development initiatives, mandatory local R&D expenditure and local skills development. Here and elsewhere, LCRs underpinned by supportive regulatory frameworks and enforcement and monitoring mechanisms are critical in expanding the local role of mining and in minimizing the enclave nature of mineral extraction by creating linkages. This paper builds a case for harmonizing LCRs across the region to benefit from economies of scale and the regional sourcing of capital, skills, supplies and other inputs and sector requirements. The regionalization of LCRs should be part of the broader process of implementing the Africa Mining Vision and the harmonization of policies in the sector in line with the SADC Protocol on Mining, and the long-term objectives of the SADC Industrialization Strategy and Roadmap and the Revised Regional Indicative Strategic Development Plan through the SADC Regional Mining Vision.