Local Content Policies in the Mining Sector in Zambia: A Synthesis of Its Benefits

Peter Kanyinji ,Gelson Tembo

doi:10.7176/ejbm/11-33-05

Abstract

There has been lots of questions as to why there is continued marginalization of small and medium enterprises (SMEs) in the mines despite local content policies. A recent report regarding estimates of input goods and services to the mines in Zambia show an accumulation requirement of US$5 billion annually and the share of domestic firms in the mining market is less than 4 per cent, while that of indigenous firms is about 1 per cent. This raises lots of questions as to what extent local content help SMEs to supply to the mines. Local content policies are legal requirements to empower local SMEs so that a share of factors of production in form of labour, supplies of goods and technology required at various stages of the value chain is sourced from the domestic economy. A survey of 350 SMEs answered a questionnaire to determine how local content policies help them to supply to the mines. It was found out that the local content only helped SMEs to improve their skills and capacity and not to help them supply to the mines or employment of the local people. The study recommends that a mining commission of Zambia be formed with executive powers to enhance the inclusion of local SMEs to the mines. Further, a local content committee and economic empowerment must be institutionalized to improve the position of SMEs and enhance economic empowerment respectively Keywords: Local content, global value chain, small and medium enterprises DOI : 10.7176/EJBM/11-33-05 Publication date: November 30 th 2019

Highlights

Introduction In theZambian mining sector, small and medium enterprises (SMEs) continue to lag behind in supplying in the mining global value chain
These local content policies are broad array of approaches that aim at increasing procurement of local goods and services, increasing hiring from local communities, and increasing the capacity of local actors in the mining global value chain
6.0 Conclusion The study concludes that the four (4) predictor variables show overall that they are significantly predictive of the independent variable

Summary

Introduction

Introduction In theZambian mining sector, small and medium enterprises (SMEs) continue to lag behind in supplying in the mining global value chain. Most SMEs worldwide who gain access to commercial activities of the mines are supported by local content policies (IFC, 2002; Ata et al, 2013; SELA, 2012). These local content policies are broad array of approaches that aim at increasing procurement of local goods and services, increasing hiring from local communities, and increasing the capacity of local actors in the mining global value chain. SMEs are excluded to participate in the mining global value chain despite the presence of local content policies promoting SMEs. The role of local content policies in Zambian mines are uncertain as it is not clear the extent to which they enhance SMEs’ growth and connectivity.

Methods

Results

Discussion

Conclusion