Local Content Law Research Articles

An Analysis of Investment Trends, Innovation and its Impact on Cabotage and Local Content Regime: Nigerian Experience from Businesses in Oil and Gas and Maritime Industries

This study looks into how Nigeria's oil and gas and maritime industries are affected by laws against cabotage and local content, with particular attention to employment rates, investment trends, technological developments, and communication. The study adopts the quantitative survey methodology. The target population comprises 358 oil and gas and maritime industries’ employees. Stratified random sampling was adopted to size the population into strata. Data was collected through a closed-ended structured questionnaire. The study used the primary and secondary data sources. The study examines the effects of local content and cabotage regulations in the two sectors, evaluating theories about employment rates, innovation, and investment trends. The result showed that there was a positive and significant effect of investment trend and innovation on cabotage law in the oil and gas industry in Nigeria (t-statistics (43.312) > critical value (0.000). Also, the study revealed that there was a positive and significant effect of investment trends and innovation on local content law in the oil and gas and maritime industry in Nigeria (t-statistics (48.491) > critical value (0.000). The findings show a strong positive correlation between compliance with these regulations and investment patterns. Turning barriers/obstacles into opportunities has proven to need effective innovation. The study recommends that policy improvement, improved innovative capacity, industry cooperation, monitoring, and enforcement will help improve compliance with the regulations and enhance investment patterns/innovation.

Reconciling the local content laws and policies in Trinidad and Guyana with the CARICOM trade rules: lessons from the European Union

Abstract Several Caribbean countries have local content laws that might go against the Revised Treaty of Chaguaramas and frequently reflect a patriotic mindset. Treaties between countries aiming primarily at the union of numerous independent nations might further complicate an industry already beset by challenges because they frequently necessitate the pooling of money and resources. This article will look at how the CARICOM nations of Trinidad and Tobago and Guyana deal with local content in their separate jurisdictions, and how it affects their CARICOM treaty obligations

Analysing the impact of oil and gas local content laws on engineering development and the GDP of Nigeria

In order to optimise the benefits of oil and gas resources, Local Content Regulations (LCRs) have escalated in the last 15 years among oil-rich economies. In Nigeria, the Nigerian Oil and Gas Industry Content Development Act (NOGICDA) gives the Nigerian Content Development and Monitoring Board (NCDMB) the rights to drive policies and set targets for the growth of Nigerian Content (also known as local content) in the oil and gas industry. Despite the increased in-country engineering capacity observed as result of NOGICDA, the non-disclosure of basic details of contracts in the oil and gas industry creates difficulties in accessing local content contribution to Nigeria's Gross Domestic Product (GDP). Thus, a simple model based on in-country spends is proposed for the estimation of change in GDP as result of increased contracts to Nigerian companies. This proposed model is used to estimate the impact of Shell Companies in Nigeria (SCiN) spend on local contractors since 2010. The study is limited to SCiN since it has consistently published the total value of contract awarded to Nigerian companies since 2010. A yearly contribution of $5.6 billion to Nigeria’ GDP is estimated as a result the contracts awarded to Nigerian companies by SCiN.

The Issue of Local Content in Offshore Renewables: Aspirational, Legally-Binding or Missing the Mark? A Comparative Analysis of the UK and Poland

The focus of this article is the evolution of local content law and policy in the context of European renewable energy understood through a critical review of the offshore wind policies of the United Kingdom (UK) and Poland. It includes an analysis of the significance of a nascent local content claim made, in 2021, by the European Commission against a former European Union (EU) Member State, the UK, and its swift resolution out-of-court in 2022.

Local Content Requirements in Nigeria's Extractive Sector and the Implications for Sustainable Development

AbstractThis article examines the framework of Nigeria's local content laws and policy, and the implications for sustainable development. The legislation is geared towards safeguarding local productivity and aiding the progressive aspirations of Nigeria's citizens. While commendable in principle, there have been questions about policy articulation, implementation and enforcement mechanisms, especially with regard to the Sustainable Development Goals. The article examines the local content legislation in Nigeria, and how policies have shaped the community-corporate nexus. This exposes the challenges facing extractive resource governance in a jurisdiction such as Nigeria and the discourses that have permeated legal scholarship on the practical deference to local content by non-state actors. It considers that well designed and implemented local content requirements are catalysts for structural development. To achieve sustainable development of its extractive sector, Nigeria requires state-led determination to stimulate economic growth and development. The article argues for continuous consultation as a bedrock for meaningful engagement.

Addressing gender inequality through employment and procurement: Local content in Tanzania's emerging gas industry

Gender is an overlooked area when it comes to local content. Few, if any, local content laws and regulations for the extractive industries globally contain any specific provisions related to gender equity or female empowerment. In the wake of the COVID-19 pandemic, shortening and simplifying supply chains has become an imperative for multinational firms. Formal employment in oil extraction is traditionally male-dominated. In Tanzania, employment in this sector is estimated to be over 80 percent male. However, the negative impacts of the industry, especially in terms of social disruption and dislocation, environmental degradation, and loss of livelihood, are more likely to be felt by women. This paper explores gender dimensions of local participation in the extractive industries, economic empowerment, and provisions mandating and setting targets for women's participation in Tanzania's emerging gas industry. It is argued that the government must pursue a holistic approach to gender equality in legislation, regulation, policy, education and training in order to maximize the benefit from extractive industries and petro-development.

Internal Management Integration Policies and School-Community Relations in Tertiary Institutions in Rivers State

The study investigated internal management integration policies and school-community relations in Tertiary Institutions in Rivers State. Two research questions and two hypotheses guided the study. The study adopted correlational design. The population of the study is 1,071 respondents. A sample of 535 respondents was drawn using simple random sampling technique. Two sets of instruments were used for data collection. The first was titled: ‘Internal Management Integration Policies Questionnaire and the second was School-Community Relations Questionnaire. The reliability of 0.83 was determined with Cronbach Statistics. Out of 535 copies of questionnaire administered, 508 were properly filled and retrieved which represented 95% return rate. The Research questions were answered using Pearson Product Moment Correlation (PPMC) while Hypotheses were tested using r-ratio at 0.05 level of significance. The finding among others are that high positive relationship exists between award of contracts to community members and school-community relations and the null hypothesis of no significant relationship between award of contracts to community members and school-community relations is rejected. It was concluded that internal management integration policies have high positive relationship to school-community relations in Tertiary Institutions in Rivers State. It was recommended among others that higher institutions’ administration should give full implementation to local content laws during the award of contracts in the school environment. Keywords: Internal, management, Integration, Policies, School-Community.

Local content implementation and development in Ghana\u2019s upstream oil and gas sector for sustainable development: contemporary issues on policy management

The need to develop and boost the potentials of Ghana’s upstream oil and gas activities has been advocated by policymakers, academics, and financial institutions since the discovery of oil and gas in commercial quantities. It has been argued that if well implemented, upstream activities have a trickledown effect on the local content policy linkages that apart from taxes, can lead to improved financial and social benefits. In this study, how Ghana can use local content policy in upstream oil and gas operations to maximum economic and social benefits for the good of the Ghana government, citizens, and the Multinational Oil Companies, is the main question to be answered? To address this question, comprehensive analysis of local content laws and policies and stakeholder consultations are conducted. The paper argues that an effective local content policy towards achieving sustainability in the upstream oil and gas industry demands balancing the needs of policymakers, local communities, Multinational Oil Companies, and regulators to succeed. The study recommends a local content implementation master plan; active participation of key stakeholders (government, citizens and Multinational Oil Companies); and integration of forward and backward linkages in the implementation of Ghana’s upstream local content laws and policies.

Achieving Local Content in Extractive Industries of African Countries

Local content defines the extent of participation of local industry in extractive industries like mining, oil and gas. These industries are major destinations of foreign direct investments. They are very important revenue streams for governments of developing and emerging economies. In many countries, however, local industry is not participating enough. Recently researchers are bringing new perspectives into research and policy on the subject. We discuss the issue based on a review of relevant literature including a study in Nigeria in the wake of the passage of the new local content laws. Our study finds that the achievement of local content depends on the collaboration of a range of actors. Local political and legal institutions, local businesses, MNCs, universities and research organizations, international development partners and donors have to contribute their political and economic resources to achieve local content.

Principal Component Analysis of Constraints to the Development of Local Content Law for the Ghanaian Construction Industry: Stakeholders’ Perspective

ABSTRACT Though Local content laws (LCLs) remain an essential tool in developing local capacities, ensuring skills transfers, community participation, enhancing linkages between the construction sector and other sectors of the economy amid competition in both the developed and developing economies, Ghana’s construction industry has been without a Local content law. This study determined the principal and sub constraints to the development of a Local content law for the Ghanaian construction industry, using principal component analysis (PCA). The use of PCA, varimax rotation in data analysis aided in reducing the large set of constraints to four principal components. Using a questionnaire survey, 667 indigenous practitioners validated 21 constraints, conceptualized from literature and structured interview, based on their knowledge and/or experience. Correlations between the 21 variables showed that four principal components explained the constraints to the development of a Local content law for the Ghanaian construction industry: political and economic, capacity, external supports, and belief constraints. It was also revealed that 4 out of the 21 constraints were peculiar to Ghana only. Findings and recommendations of this study may be useful for industry stakeholders who are seeking innovative ways to develop indigenous construction firms’ competitiveness and capacity and LCL related decisions.

Oil and Gas Industry Contents Development Act 2010 (Local Content) Law and Challnges in Nigeria

Any policy, law or regulatory framework that adds value to the indigenous host country’s goods, services and human beings has in it the local or indigenous content. An examination of the Oil and Gas Contents Development Act 2010 in Nigeria will show significant progress made in the foray of the hitherto the dark horse – indigenous oil and gas companies into the elite oil and gas class previously `reserved` for the Multinational Oil and Gas Corporations. This was made possible by the emerging local content laws. However, a lifting of the veils of its actual performance, would reveal both latent and patent challenges facing the application of local contents laws particularly in Nigeria., This paper examines the operations of the Nigeran Oil and Gas Contents Development Act 2010, the challenges and possible recommendations on how to bring it in line with the best global practices. This paper found amongst others that infrastructural and capacity development are the power- base to driving effective local content application anywhere but are sadly lacking in Nigeria. It also found that the Nigerian version of the local contents law tilts towards protectionist regime rather than liberal approach and that a synergy of both frameworks is desired for the smooth operations of local content laws in Nigeria. This paper finally concludes that Nigeria can take a cue from other countries such as Norway and Brazil while considering the peculiarities of the Nigerian oil and gas industry. Keywords Oil and Gas: Local contents law and Practices, challenges and recommendations DOI: 10.7176/JRDM/65-05 Publication date: May 31 st 2020

Local isomorphism and multinational enterprises’ human resource management practices: Extending the research agenda

AbstractLocal isomorphism constitutes the regulatory, cognitive and normative profile of a host country. The regulatory institutional setting reflects the rules and legislation governing collective bargaining agreements, trade unions, local content laws and employment relationships. The cultural or cognitive dimension supports the widely held cultural and social knowledge and the normative profile acknowledges the influences of social groups and organizations on acceptable normative behaviour. Earlier literature lends support to the importance of institutional profile and its influence on the design and implementation of multinational enterprises’ human resource management policies and practices. This paper seeks to advance the concept of local isomorphism and highlight the implications of local isomorphism for future research on the transfer of multinational enterprises’ human resource management practices across and between subsidiaries.

Scale, local content and the challenges of Ghanaians employment in the oil and gas industry

Local content laws are essential for promoting positive synergies between extractive industries and broader economies. This paper is a critical evaluation of the employment effects of Ghana's local content law. It draws on the relational geography concept of scale – a constructed arena of activities that are highly interrelated – to examine the dynamic roles and relations between actors and how that shapes employment opportunities and outcomes for Ghanaians in the oil and gas industry. The paper shows that Ghanaians dominate onshore administrative positions and low echelon (ratings)/low skill positions offshore. There is a significant salary disparity between Ghanaians and expatriates due to poor regulation by the petroleum commission, corruption and undercutting by local recruitment agencies. It is imperative that the petroleum commission stringently enforce the regulation on skill transfer, introduce guidelines on salary and conditions of service as well as effectively monitor and regulate the activities of local recruitment agencies to limit their ability to undercut Ghanaian workers.

Local Content in the Upstream Petroleum Sector of Ghana. How Well Is Ghana Doing So Far?

Following the discovery of Oil and Gas resources in commercial quantities in the year 2007, Ghana sought foreign expertise with the much needed technical and financial resources to exploit the newly found resources. Seeing that the upstream Oil and Gas industry is a hugely technical and capital intensive area, the Government of Ghana through the Ministry of Energy and the Petroleum Commission adopted a local content policy in the year 2011, and subsequently passed a Legislative Instrument through the Parliament of Ghana in the year 2013 to enforce the policy. The motive of this move was clear. It was and is to ensure that the upstream Oil and Gas industry of Ghana provided non-fiscal benefits such as employment opportunities, avenues to allow Ghanaian businesses supply goods and services to the industry and also ensure that there is proper technology transfer to give the Ghanaian technocrat the ability to have the necessary skills and technical know-how to run the upstream Oil and Gas sector in the nearest future. The question this research seeks to answer is how well Ghana has done so far in its quest to ensure local content in the upstream Oil and Gas sector since the year 2013. Using mostly qualitative techniques and methods, this research extensively employs content analysis to organize, summarize and categorize data from which patterns and links were drawn from literature reviewed. Data is analyzed along these themes: employment opportunities allowed Ghanaians, supply chain advantages to Ghanaian businesses, technology transfer and the institutional effectiveness in enforcing local content laws in the industry. Findings suggested that Ghana had made some good strides in terms of ensuring employment for Ghanaians in the upstream Oil and Gas sector though targets with regards to ensuring that Ghanaians held almost all core technician positions in 10 years are overly ambitious. This is because of the apparent lack of the necessary technical and professional skills. On the supply of goods and services to the industry, the capital intensive nature of the industry coupled with high cost of borrowing for Ghanaian businesses makes it nearest impossible to compete fairly with foreign competitors. However, to ensure some advantage in terms of the supply of goods and services in the industry, the local content laws have earmarked some areas in the industry like transport and aviation services, financial and insurance services etc. for only Ghanaian players. It is worth noting however that foreign companies which are not obliged to comply with local content laws because Ghanaian laws do not take retroactive effect, on their own have commendable local content policies to help Ghanaians derive the necessary benefits from the Oil and Gas resource. The companies view this gesture as part of the Corporate Social Responsibility (CSR) strategy. This study further finds that the Petroleum Commission and other enforcing institutions will need to further enhance their capacities to enforce local content laws. Overall, Ghana’s local content laws are good ones with clearly stated objectives and goals and would help citizens derive the needed benefits from the upstream Oil and Gas industry if strict enforcement is prioritized and done.

The micromechanisms of power in local content requirements and their constraints on Ghanaian SMEs in the oil and gas sector

ABSTRACTLocal content laws have the potential to promote positive synergies between the extractive sectors and African economies. However, their success is a negotiated outcome of interaction between actors. The objective of the article is to emphasize the mechanisms by which local content requirements are negotiated between actors in Ghana’s oil and gas industry, by drawing on Foucault’s concept of power. Data for the study were obtained through interviews, observations and secondary sources. The author found that complex registration systems, administrative details, and financial and technological requirements constituted the micromechanisms of power at play in determining how the local content law was applied in practice. The article demonstrates how these factors limit the activities of small and medium-scale enterprises (SMEs) in the oil and gas sector. The author concludes that the institutional context, the capacity of local SMEs, and the techniques and practices of multinational corporations (MNCs) shape the extent of local participation in Ghana’s oil and gas industry.

Developing effective local content regulations in sub-Sahara Africa

PurposeThe authors propose a strategic-balance approach to local content laws in which less developed economies in sub-Sahara Africa can develop investment incentive policies for attracting multinationals and direct foreign investment but, at the same time, have a structured and operational framework for the enforcement of local content laws. The purpose of the paper is to identify the elements involved in the equation: the incentives, the potential spillovers and the criteria for evaluation.Design/methodology/approachThe approach involves a review of the literature and the operational details and limitations of local content laws in sub-Sahara Africa.FindingsThe paper develops a conceptual model for a holistic understanding and management of this dilemma by policymakers and development practitioners to maximize the benefits of natural resources to less developed countries in sub-Sahara Africa towards the fight against poverty and underdevelopment.Research limitations/implicationsThis paper provides the opportunity to influence policy direction in relation to the adoption of investment incentive policies and programs and the enforcement of local content policy guidelines and regulations in sub-Sahara Africa.Practical implicationsMultinational companies (MNCs) operating in less developed and emerging economies in sub-Sahara Africa should consider how their economic and corporate social responsibility activities can help develop the capabilities of the local workforce through training and development activities; develop domestic firms’ capabilities via enterprise development programs; and develop local firm’s absorptive capacities through knowledge transfers and innovation systems to support development activities.Social implicationsPolicymakers in less developed and emerging economies in sub-Sahara Africa need to strike a balance in adopting investment incentives policies towards attracting foreign investments and the enforcement of local content regulations to make sure they derive the maximum benefits from their strategic resources. It is important for policymakers to understand that the mere attraction of MNCs into an economy does not explicitly guarantee domestic job creation; rather, it depends on how MNCs respond to local content policy regulations through their business strategies. Linking investment incentives with local content policy regulations at a critical point could potentially support and strengthen industrial development in sub-Sahara Africa.Originality/valueThis paper is among the first to examine the challenges of both attracting foreign direct investment and enforcing local content laws and regulations in sub-Sahara Africa. This paper contributes to the understanding of this dilemma and how less developed economies can manage such a crucial and important issue using our proposed strategic-balance approach. The contribution of local content laws and the design and adoption of investment incentives policies and programs to attract foreign investment to promoting sustainable domestic growth and development must depend on the balance between the enforcement of local content policy guidelines and the provision of such investment incentive packages to attracting foreign investment.

Oil, Local Content Laws and Paternalism: Is Economic Paternalism Better Old, New or Democratic?

Although paternalism has long been studied, the ‘new paternalism’ has received relatively little attention, and much less attention in the oil and gas industry where interferences into preferences centre more strongly on the supply, rather than on the demand, side. The ‘choice architects’ in Ghana have succeeded in nudging local businesses to go into the provision of services for the oil industry and the supply of goods and services needed in the petroleum sector. Yet, the new paternalism in the petroleum industry has had major limitations too, including re-enforcing systemic inequality and labour exploitation, while paying scant attention to the destruction of local content. These problems can only be addressed through systemic redistribution, structural transformation of the economy, comprehensive social protection and deliberate interventions for ecological sustainability. In this process of social change, an embrace of old paternalism will not do neither will asserting a new paternalism as the philosophy behind local content laws and policies. A philosophy and praxis of democratic paternalism provide a surer path for more effective transformation.

Networks, trust and capital mobilisation: challenges of embedded local entrepreneurial strategies in Ghana's oil and gas industry

ABSTRACTIn December 2010 Ghana pumped its first oil and a local content law was passed in 2013 to promote local participation in the oil and gas industry. This paper examines Ghanaian entrepreneurial activities and the dynamics of local participation in the emerging oil and gas sector. We explore Ghanaian entrepreneurs' strategies of mobilising networks to acquire information, build trust, raise financial capital and reduce risk with the aim to gain entry, win contracts and participate in the oil and gas industry. We argue that the resources and strategies activated by entrepreneurs embedded in the context of the Ghanaian business environment are inadequate and problematic when deployed in the context of the international oil and gas industry. The international oil companies' cost-intensive standard requirements and state officials' informal interventions further limit local firms' prospects for participation in the oil and gas industry.

Local content and participation in Ghana's oil and gas industry: Can enterprise development make a difference?

In 2013, a local content law was passed with the purpose of promoting internal and external linkages between Ghana's oil and gas sector and the broader economy. An Enterprise Development Centre (EDC) was established to enhance the capacity of indigenous Ghanaian firms and promote their participation in the oil and gas industry. This study examines the forms of linkage the EDC project promotes. Drawing on Bourdieu's distinction between social, cultural, economic and symbolic capital, different aspects of and ways of enhancing local entrepreneurial capacity are examined. It finds that the EDC facilitates interaction between local entrepreneurs, officials of state institutions and foreign oil companies, which enhances local entrepreneurs’ knowledge of the oil and gas sector and provides enterprises with an entry point. However, it is argued that only a few well-established medium to large-scale Ghanaian enterprises are able to take advantage of the opportunities provided by the EDC project to expand their operations. The majority of relatively new and small businesses are still unable to gain entry.

The Nigerian Oil and Gas Industry Content Development Act 2010: an examination of its regulatory framework

AbstractThe passage into law of the Nigerian local content bill is one of the significant developments for domesticating the oil and gas industry through local value additions to the local economy. The bill received presidential assent on 22 April 2010 and created a law to provide for the development of indigenous content in the Nigerian oil and gas industry. The law also establishes the Nigerian Content Monitoring Board (board), which is charged with the responsibility to manage the coordination, monitoring and implementation of the local content law. Previous acts of the government had made feeble attempts at developing a local content framework for the industry and the fanfare associated with the recent enactment into law of the Nigerian local content bill very understandable. Nigeria is the world's eighth biggest oil exporter and relies on crude as its main foreign exchange earner. The industry accounts for over 40 per cent of Nigeria's gross domestic product and is associated with over a billion dollars worth of investments annually. There is a marked absence of indigenous players involved in these transactions, where about 90 per cent of goods and services used in the industry are imported from overseas. The local content law seeks to increase indigenous participation by prescribing minimum thresholds for the use of local services and to promote the employment of Nigerian staff in the industry. In this article, the writer makes a succinct analysis of the provisions of the Nigerian Local Content Act and argues that an antidote has been found for local participation in the vibrant Nigerian oil and gas sector. The writer concludes that, similar to Saudi Arabia, Venezuela and Kuwait, the local content law will go a long way in empowering indigenous oil and gas companies and assist Nigeria in developing the technical capacity for the industry.