5.5 Local Content

full all chapter5 chapter6 chapter7 chapter8 chapter9

chapter4 chapter5 chapter6 chapter7 chapter8 chapter9

Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Most petroleum and mining laws require that international resource companies adopt some measure of preference for local goods and services. Apart from the direct benefits to stakeholders such as local businesses, entrepreneurs and communities through access to business opportunities and diversity of markets, access to capital, technology and productivity, there are wider benefits: increased employment and skills, increased domestic and foreign investment, technology and knowledge transfer from foreign companies, exports and foreign exchange and increased government revenues.

The definition of ‘local content’ is very important. Some countries consider ‘local’ companies to be those that are registered nationally, rather than fully taking into account the degree of value addition and the levels of participation by local individuals. Ideally, preference should be given to companies that are involved in actual manufacturing activity as well as those with significant ownership, management and employment of local citizens. Companies within the ‘region’ should also be treated as ‘local’.

Problems can arise in implementation of a local content policy such as is required in the following provision in Chad that requires the licensee to “give priority to those goods and services available in Chad insofar as their prices, qualities, quantities, delivery terms and sales conditions compare to goods and services available abroad and do not require the licensee to bear any kind of extra economic burden”.  Provisions such as these are often insufficiently disseminated, monitored or enforced. Moreover, it may be difficult or impossible to compare factors such as the reliability or performance quality of a local supplier of goods and services in relation to other competing suppliers.

Nonetheless, contracts may include fairly elaborate provisions on this which specify criteria, including certification, to identify when materials are not available locally or at reasonably comparable quality standards. They may also involve a monitoring system through the national resource company or a specialized government agency or procurement office.


Additional Reading:



  • Carrie Walker: Is anyone familiar the local content regulations in Mauritania? I am unable to locate anything online however have been advised they do exist?… read more
  • daniel gilbert: Dear Cesare Many thanks for the below considered response. Great to hear from someone working in Local Content - an area I am very interested in myself. Firstly, I have uploaded the below as requested (thanks) to the website, see… read more
  • Cesare Pagani: Dear Daniel, impressive initiative and very good source of information. A personal note on what I would like to see more is the interconnection between local investments and know how transfer through employment, training and development of the… read more
  • daniel gilbert: To give context to the below comment from Prisca, she is commenting on what is now the main body text of this section, not Box 5.3. This main body text used to be in a comment box. btw - congratulations to Prisca on her new job in Senegal for… read more
  • Prisca de Beauchamp : I finally had a chance to look at the local content area of the source book website. Of course, there is a lot to/too much to say about local content for a box! But here are a few comments that crossed my mind reading the document. 1-… read more