Local content management in Tanzania's extractive sector: How effective is it?

Abstract

There is an assumption that a country's natural resource wealth, when harnessed, yields socioeconomic gains. This, however, has rarely been the case in developing countries. This has led many to implement resource-nationalist legal frameworks: to maximize public rents, secure strategic public ownership and facilitate local value-addition. Implementation of Local Content (LC) policies has been the most prominent resource-nationalistic strategy pursued by developing countries to achieve these outcomes. But while important, LC policies themselves do not necessarily guarantee success. It is against this background that this study set out to explore experiences of LC strategy in Tanzania, a country with a lengthy history of development strategies linked to extractive industries, with a view to assessing its effectiveness in delivering socioeconomic gains. Assessment of the LC experience in Tanzania's extractive industries underscores the importance of continuously reviewing the (LC) legal framework to ensure that it continues to be facilitative, prioritize communities’ needs, provide a clearer demarcation of mandates for various government institutions that oversee its execution, enable meaningful participation of grassroots authorities in governing, and enhance enforcement of regulations. In Tanzania, there is a need to build a manufacturing base to catalyze local value-addition and establish a funding mechanism for local suppliers.