Local Content and Local Participation in the Oil and Gas Industry: Has Ghana Gotten It Right?

The discovery of oil and gas resources comes with many expectations about its potential to boost socio-economic development. However, for many developing countries, such good news often leads to decline in other sectors of the economy. The negative outcomes of resource extraction often referred to as the so-called ‘resource curse’ is the conundrum many African countries face. One of the efforts to counteract this damaging effect of natural resource extraction is local content and local participation law and policies that promote linkages between the oil sector and the broader economy. In 2013, Ghana introduced a local content regulation (L.I. 2204) to help local participation in its oil and gas sector and create other synergies with the broader economy. This chapter describes and examines the impact of Ghana’s local content policy and legislation, emphasising the successes, challenges of implementing the law and its prospects. Specifically, it sheds light on the factors hindering the smooth and effective implementation of the policy and legislation. The chapter traces the channels through which local-content legislation is advancing value creation in Ghana by evaluating different implementation programmes, using clearly stated local-content targets to measure and benchmark efficiency and efficacy. Significant challenges identified include non-transparent and inaccurate contractual and employment data, limited partnerships and institutional support for local companies, certification challenges, and business fronting. The chapter also identified employment creation, technology transfer, local ownership, and regulatory enforcements to maximise local procurement and businesses as prospects for the local content law to promote local participation.