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Develop framework to track success of local content targets • IMANI to Govt

By: Jessica Acheampong
Ms Barbara Andoh — Research Associate, Centre for Energy and Natural Resource, IMANI
Ms Barbara Andoh — Research Associate, Centre for Energy and Natural Resource, IMANI

A Research Associate at the Centre for Energy and Natural Resource, IMANI, Ms Barbara Andoh, has urged the government to develop a comprehensive framework to track the success of the implementation of its Local Content Policies (LCPs).
 explained that given the costs imposed by local content, LCPs must be effectively monitored and tracked to ensure that benefits that accrued overtime, outweighed costs.

At a forum to discuss the findings of a research conducted by IMANI Africa on local content involving eight countries on September 5, Ms Andoh noted that across countries and sectors studied, measurement and tracking of local content was seen as a non-deliberate and non-comprehensive activity.

In Ghana, however, the Petroleum (Local Content and Local Participation) Regulations 2013, LI 2204, indicates that local content is measured on a field-by-field basis from the time of the award of contract.

That approach, she explained, was not<

“There is the need to develop a comprehensive metrics and frameworks to appropriately track year-on-year achievement of local content targets or improvements in local content levels,” she said.

Other recommendations
Recommendations in the study included the need to bolster the monitoring of both local entrepreneurs and foreign investors in light of local content partnership to ensure compliance with regulations.

It also called for an investment into the design of a capacity audit system for sectors of the economy and a cost-benefit analysis of local content to ascertain whether benefits outweighed costs.

“Local content application should be guided by a long-term development strategy which will identify critical gaps in the economy to be filled. In sectors where local capacity is identified as inadequate (short, medium and long term), focus local content efforts on attaining higher levels of employment and training,” the study recommended.

Local content in Ghana
Ghana’s local content regulation defines the concept as the quantum/percentage of locally produced materials, personnel, financing, goods and services used in the oil industry and which can be measured in monetary terms.

In terms of local participation, it looks at the level of Ghanaian equity ownership in the oil and gas industry.

Ms Andoh explained that although there was a motivation for the application of distinct local content policies in several sectors of the Ghanaian economy, local content application in the oil and gas sector has not been without issues.

Objectives of local content
Ms Andoh explained that the crux of local content was to allow countries the opportunity to build capacity in economic sectors where they would otherwise have limited opportunity.

She added that it generally required foreign investors to purchase domestic goods and services, employ and train citizens, transfer technology and know-how and to contribute to research and development.