Common throughout the energy and mining sectors, local content policies aim to help domestic industries fully benefit from foreign investments by ensuring the involvement of local companies. Many local policy laws follow the principle that a country’s national resources belong foremost to its citizens, and thus the management of materials such as oil and gas should benefit the local economy.
In the energy sector, local content laws ensure that small domestic suppliers have the opportunity to provide the majority of services and materials necessary throughout the stages of oil and gas production. They focus not only on increasing local employment but also on fully engaging the domestic workforce, offering relevant skills in addition to business opportunities.
Countries including Nigeria, Ghana, Morocco, Uganda, and South Africa have all passed local content laws. One such law, the Nigerian Oil and Gas Industry Content Development Act, grants preference to local firms in petroleum licensing rounds and sets guidelines to encourage international oil firms to hire local workers for Nigerian projects. Similarly, Ghana’s local content policies give local companies priority in oil block bidding. Ghanaian law also requires that every oil license includes an equity stake for Ghanaian companies valued at no less than 5 percent.