Local Content Frameworks in the African Oil and Gas Sector: Lessons from Angola and Chad

This paper seeks to identify the main characteristics and outcomes of local content frameworks (LCFs) in African oil and gas producing countries. This research is based on the hypothesis that the more specific the LCFs, the better the outcomes. The study adopts a comparative case study approach based on experiences in seven African countries (Angola, Chad, Equatorial Guinea, Ghana, Nigeria, Tanzania and Uganda) with aim of understanding the broader context and trends. To achieve this objective, a regional catalogue of LCFs and practices is developed in order to fill the knowledge gap about local content experiences in Africa. The cases of Angola and Chad are explored in greater detail in order to identify additional factors that may shape the outcomes of LCFs. The research reveals two main findings. First, all seven countries in the study have implemented LCFs to promote local employment, skills development and national industry participation. However, only Angola, Ghana and Nigeria have developed specific local content policy, legislation and contracts for the oil and gas sector. Second, there appears to be a direct correlation between specificity of LCFs and the outcomes achieved. Countries with more specific LCFs (such as Angola and Nigeria) tend to produce better outcomes while those with less specific frameworks (Equatorial Guinea, Tanzania and Uganda, for example) produce weaker outcomes. The analysis also shows that Ghana and Chad are exceptional cases. Although Ghana has a specific LCF, it has registered low outcomes probably because of the short time the country has had to implement the provisions. On the other hand, although Chad has no specific legislation or policy relating to local content, it has achieved outcomes comparable to Angola and Nigeria, thanks largely to a relatively conducive fiscal regime and the establishment of an enterprise centre which has built capacity and developed skills among local companies and has played a pivotal role in negotiations around production sharing contracts with international oil companies (IOCs).