Local content policies in West Africa's mining sector: Assessment and roadmap to success

Abstract

Prior research has shown that natural resource rich countries tend to experience slow economic growth and poverty. Mining areas and nearby communities may not fully benefit from their mineral wealth and can be at risk for increased poverty, especially during bust cycles. This phenomenon, at the regional and national level, has become known as The Resource Curse. Scholars pinpoint the lack of broad-based economic development on the fact that extractive industries, which are often viewed as “enclave” industries that have few linkages with local economies, generate very few jobs locally. To combat this phenomenon, many national governments have instituted Local Content Policies (LCPs) that mandate or, at minimum, encourage foreign firms to pursue local employment and training, technology transfer, and local procurement of goods and services. LCPs have shown promise in capturing positive spillover effects from mining. However, much is still not well-known about the true effect of local content policies in these areas. Moreover, LCPs do not give enough consideration to marginalized groups such as women and indigenous peoples. Although Free, Prior, and Informed Consent (FPIC) is a tool that is gaining traction in the context of large-scale development projects that are expected to affect indigenous people, there is no systematic consideration of indigenous people when countries are crafting LCPs. This paper aims to summarize LCPs in West Africa and what is known about their effectiveness, investigate the circumstances under which LCPs benefit the national and local economy, and identify how marginalized groups such as women and indigenous peoples can be better targeted and assisted by these policies.