By Ndapwilapo Selma Shimutwikeni
In light of the recent oil and gas discoveries in Namibia, local content was a central focus at the recently concluded 6th edition of the Namibia International Energy Conference, attended by over 750 delegates from 46 nations.
In the oil and gas industry, local content refers to the development of local industries, a workforce, and resources to support the operations of international oil companies within a country.
Fostering ‘Namibian Content’ can significantly enhance Namibia’s economic growth, social development, and technological advancement.
As highlighted by the World Bank, “Implementing effective local content policies can drive economic growth and development in resource-rich countries.
By building local capacity and fostering the development of local industries, these policies can create jobs, enhance skills, and ensure that a greater share of the benefits from natural resource extraction remain within the country.”
This article delves into the benefits of local content—in our case, “Namibian Content”—and highlights success stories from other countries.
KEY BENEFITS
Economic Growth and Job Creation
Local content policies can catalyse economic growth by ensuring that a significant portion of the industry’s value chain is retained within the country.
By promoting the use of local goods, services, and labour, these policies can create a myriad of job opportunities for Namibians.
This fosters employment and stimulates the development of ancillary industries, such as manufacturing, logistics, and services, which support the oil and gas sector.
For instance, in Brazil, implementing local content requirements led to the growth of the domestic shipbuilding industry, creating over 30,000 jobs and reducing the country’s dependency on foreign vessels.
Similarly, in Ghana, local content policies in the oil sector have resulted in increased employment, with over 7,000 direct jobs created since the inception of the policies and the establishment of new businesses to service the industry.
Skills Development and Knowledge Transfer
One of the most significant benefits of local content is developing skills and transferring knowledge to the local workforce.
By involving Namibians in various aspects of the oil and gas industry, from exploration to production, they gain valuable expertise and experience.
This enhances their employability within the sector and equips them with transferable skills to other industries.
Norway provides a prime example of how local content can lead to substantial skill development. The country’s local content regulations required international oil companies to partner with Norwegian firms and train local employees.
As a result, Norway has developed a highly skilled workforce and a robust oil services industry that now competes globally.
The country has consistently maintained a high employment rate within the oil and gas sector, with approximately 250,000 jobs supported by the industry.
Economic Diversification Local content policies can also contribute to the diversification of Namibia’s economy.
The country can reduce its reliance on oil revenues and build a more resilient economy by developing industries related to the oil and gas sector.
This diversification can include the growth of industries such as engineering, tourism, construction, information technology, education, agriculture, and environmental services, which can stabilise oil price volatility.
Malaysia’s approach to local content has facilitated economic diversification. The country’s Petronas-led initiatives ensured that local companies were integrated into the oil and gas supply chain, leading to the growth of Malaysia’s engineering and construction sectors.
Today, these sectors contribute significantly to the national economy, with the oil and gas industry supporting over 200,000 jobs.
Increased Local Participation and Ownership
Local content initiatives often emphasise increased local participation and ownership in the oil and gas industry. By encouraging joint ventures and partnerships between international companies and local firms, Namibia can ensure that a more significant share of the profits remains within the country.
This can lead to the creation of local champions, that is, companies that grow to become important players in the sector. For example, Nigeria’s local content law has been instrumental in fostering local participation.
The Nigerian Content Development and Monitoring Board (NCDMB) has overseen the growth of indigenous oil companies and service providers, ensuring that a significant portion of the industry’s value is retained within Nigeria.
The NCDMB’s efforts have increased local participation from 5% to over 30% in the past decade. Social Development and Community Benefits Local content policies can also drive social development by ensuring that the benefits of the oil and gas industry extend to local communities.
In some countries, these policies can mandate investments in community infrastructure, education, healthcare, and other social programs, thereby improving Namibians’ quality of life.
Additionally, local content can foster a sense of ownership and pride among local communities as they see tangible benefits from the industry operating in their region.
In Angola, local content regulations have contributed to social development through initiatives like the Angolanisation policy, which prioritises hiring and training local citizens.
The oil companies operating in Angola must invest in community projects, leading to improved healthcare facilities, schools, and infrastructure in oil-producing regions. For example, investments in the health sector have led to the construction of over 100 health centres in the country.
Technological Advancement and Innovation
Local content policies can spur technological advancement and innovation by involving the workforce of local companies and the oil and gas sector.
When local firms are part of the industry’s supply chain, they are often required to meet international standards, which drives them to improve their technologies and processes.
This can lead to a broader technological base in Namibia, benefiting other sectors of the economy as well.
Brazil’s local content policies in the oil and gas sector have significantly boosted the country’s technological capabilities.
The collaboration between Petrobras and local firms has led to advancements in deepwater drilling technologies, making Brazil one of the leaders in this area.
The technological expertise developed through these initiatives has also been applied to other industries, promoting overall economic growth.
Keys to Successfully Implement Local Content
Local content policies require strategic focus and proactive measures. Here are the key factors to consider: Capacity Building: Invest in developing a skilled local workforce and capable local companies.
Establish comprehensive training and development programs to transform the local talent pool, creating a robust and competent workforce that meets industry demands.
Streamlining Regulatory Processes
Simplify and improve regulatory frameworks to enhance compliance and boost investor confidence. Address bureaucratic challenges to ensure smoother operations for international and local companies, resulting in accelerated project timelines and a dynamic business environment.
Financial Support
Provide financial incentives and investment opportunities to empower local firms.
This support helps them upgrade infrastructure and technology, enhancing their competitiveness and ability to meet industry standards, thus fostering collaboration and growth alongside established international companies.
Adapting to Market Dynamics
Encourage local companies to embrace the global nature of the oil and gas industry.
Competing with advanced international firms can drive local companies to innovate and improve, enabling them to gain a strong foothold in the market.
Ensuring Quality and Standards
Focus on quality enhancement and adherence to industry standards. Continuous improvement and training programs can help local products and services achieve the high standards required, boosting their reputation and competitiveness on the global stage.
Local content policies can be successfully implemented by concentrating on these key areas, leading to sustainable growth, innovation, and a thriving local industry.
Examples of Success Stories from Other Countries
Norway: As previously mentioned, Norway’s success in the oil and gas sector is a testament to the effective implementation of local content policies.
Norway has developed a world-class oil services industry and a highly skilled workforce by mandating local suppliers and workers. This has resulted in substantial economic benefits and positioned Norway as a global leader in the sector.
Brazil: Brazil’s local content requirements have created jobs, fostered economic growth, and driven technological innovation. The country has developed a robust oil and gas industry, supporting many local businesses and industries.
The success of Brazil’s local content policies has made it a model for other countries seeking to maximise the benefits of their natural resources.
Nigeria: Nigeria’s local content law has significantly increased local participation in the oil and gas industry.
The Nigerian Content Development and Monitoring Board has ensured that local companies and workforce are integral to the industry, leading to increased revenues, job creation, and social development.
Nigeria’s experience demonstrates the potential of local content policies to transform an economy and improve the livelihoods of its citizens.
Qatar: Qatar has implemented local content policies to ensure its citizens benefit from its substantial oil and gas wealth.
The country’s Qatarisation policy aims to increase the number of Qatari nationals employed in the energy sector to 50%. This policy has significantly invested in education and training programs to equip Qataris with the necessary skills.
The success of these programs is evident in the increased participation of Qatari nationals in technical and managerial positions within the industry.
United Arab Emirates (UAE): The UAE has also seen success with its local content initiatives.
The In-Country Value (ICV) program, launched by ADNOC (Abu Dhabi National Oil Company), aims to support local businesses and create jobs for UAE nationals.
The ICV program has driven over $20 billion into the UAE economy and created thousands of jobs for Emiratis.
Additionally, it has encouraged international companies to partner with local firms, fostering technological transfer and capacity building.
In conclusion, the benefits of local content in Namibia’s oil and gas sector are manifold.
By focusing on economic growth, skills development, economic diversification, increased local participation, social development, and technological advancement, Namibia can ensure that its oil and gas resources are a blessing for its population of three million.
However, it is crucial to recognise and address the challenges of implementing local content policies. Learning from the success stories of countries like Norway, Brazil, Nigeria, Qatar, and the UAE, Namibia can implement effective local content policies that drive sustainable development and improve the quality of life for all Namibians.
It is essential to take a pragmatic approach, considering Namibia’s unique attributes and context, to ensure the policies are tailored to the specific needs and potential of the country.
The key to success is striking the right balance between local requirements and international competitiveness. In addition, governance is crucial to ensure transparency, accountability, and practical implementation, ultimately leading to sustainable and inclusive growth.
About the Author: Ndapwilapo Selma Shimutwikeni founded the distinguished Namibia International Energy Conference (founded in 2012) and is the Chief Executive Officer of RichAfrica Consultancy.
www.richafricaco.com | www.nieconference.com selma@richafricaco.com
