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Oil & Gas Event: local content and value addition of some African countries

African Center for Economic Transformation
African Center for Economic Transformation

A key concern about the management and use of Africa’s mineral, oil and gas (MOG) resources is that citizens of most resource-rich countries do not receive a fair share of the large rents and benefits from the extraction of their resources for many reasons.

African Center for Economic Transformation
African Center for Economic Transformation
Among them, contracts and governance regimes are not always designed to optimize country benefits.

And resource policies are often designed to promote and attract investments with little or no deeper developmental strategies to ensure beneficial outcomes for current and future generations.

Local Content & Value Addition is an important strand of ACET’s thematic work on Extractives – one of eight core pathways and drivers identified as vital to Africa’s economic transformation during the African Transformation Forum jointly convened by the Government of Rwanda and the African Center for Economic Transformation (ACET) in March 2016 in Kigali. The main outcome of the forum was the launch of the Pan-African Coalition for Transformation (PACT), a network designed to bring together key stakeholders around shared themes to speed up economic transformation in Africa. Since the launch of PACT, the Coalition has been making steady progress towards becoming a vehicle for transformational policy implementation across the continent.

Under the right circumstances, local content and value addition strategies can do more than secure optimal rents (royalties, taxes and other revenues). They can be important catalysts for resource-based growth and development. These policies have now become part of regulatory requirements in securing resource contracting and licensing. Against this rising phenomena, ACET embarked on an eight-country study on local content and value addition policies in mining, oil and gas sectors in Africa, with funding support from the World Bank.

A key objective of this study is to deepen understanding of the conversation around “resources and development” and to fill knowledge gaps about actual country practices. The selected countries are Burkina Faso, Ethiopia, Ghana, Mozambique, Namibia, Nigeria, South Africa and Zambia. These constitute a mix of mineral-rich and oil and gas-rich economies, in varying stages of their mineral, oil and gas development, and on different socio-economic and historical pathways. All these considerations inform country development strategies.

Working in collaboration with country researchers, the study combined initial desk and field work to gather the most appropriate data. The work focuses on five key pillars of local content and value addition emerging from the MOG sectors, namely:

· Local employment;

· Local procurement of goods and services;

· Local participation through equity and management;

· Local financing opportunities; and

· Value addition.

The country workshops brought together a range of stakeholders to review the initial study findings. This Policy Learning event is the final stage of the study to disseminate the key study findings and to use it as a basis for informing the high-level membership of PACT.

ACET’s work aligns with the strategic program cluster of the African Minerals Development Centre (AMDC) of the UN Economic Commission for Africa and with the Africa Mining Vision (AMV). This seeks to promote broad based growth and development through industrial and infrastructural linkages. ACET is currently in discussion with the AMDC on how to leverage the output of our local content and value addition studies to advance the AMV objectives.

The Johannesburg event constitutes an action-oriented discussion among technicians, industry players, country officials, policy experts and other stakeholders, which will serve as part of pre-launch activities for the Extractives chapter of PACT.

The objective of the two-day meeting is to come up with high-level actionable items to be further developed into implementation plans at the country level. The focus will be on key issues identified from the country studies.

Recommendations from this policy learning event will be carried over into the consultation meeting with Mineral, Oil & Gas Ministers, and Finance Ministers, at the next African Transformation Forum, scheduled to take place in November 2017 in Kigali, Rwanda.

Follow #PACT2017 #LCVA2017 to join the debate and email Sarah-Jane Danchie (sjdanchie@acetforafrica.org) or Richmond Commodore (rcommodore@acetforafrica.org) for more information.

Updates on www.acetforafrica.org and @acetforafrica

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