Converting African natural resources to economic development

With its unique geographical location, Africa is rich in natural resources. This advantage can bring economic advancements in the region if properly managed. We all know that a way to convert Africa’s natural resources to an economic development is by exporting minerals. There is indeed another way to convert these assets, and that option is through Local Content policies.

Local content is known as locally sourced components needed for the production of a certain product. Instead of purchasing or acquiring the needed elements from other countries, huge investors will only need to source locally.

Many African leaders are aware of the importance of this concept. Local businesses will flourish with the idea of having bigger companies acquire raw elements from them. Investors are also open to the idea but are being analytic when it comes to its potentially harmful effects.

In Mozambique, the idea of a local content is widely implemented. Mozambican vice minister on Mineral Resources Abdul Razak Noormahomed seeks international support on their campaign. Mozambique aims to increase the involvement of small local businesses on a bigger commercial scene by supplying materials, services or labours to huge investors. “We want to increase the local content, because we want as much as possible small and medium level companies to be part of the business, providing goods and services to the big companies. And we are asking the support not only of the international organisations, but also from the companies in order to support our small and medium level enterprises.”  – Noormahomed.

Though foreign investors are supportive of the concept, they still have some skepticism to consider. Repsol’s Arturo Gonalo Aizpiri says “we have to do all we can to make sure that the local society is benefiting from our activities, that cannot be mistaken with trying to protect inefficient sectors or companies.”

World Bank have conducted a study in Angola regarding the economic effects of the Local Content Policy. Angola has been implementing the said policy for at least three decades now. According to World Bank, Angola’s Local Content policy has been partially effective in diversifying its local oil industry. Despite that, the benefits from Local Content policy have not reached the majority of Angola yet.

Oil rich African countries such as Angola, Mozambique, Ghana, Uganda and Kenya are actively using Local Content Policies. They are continuously finding ways on how to make use of their natural resources in such a way that their policies will also generate jobs. Natural resources are limited. Soon enough, these wealth are will run out. As early as now, the entire African continent should find innovative ways on how their natural resources can work to their advantage.

Humphrey Kariuki Ndegwa is a Kenyan serial entrepreneur best known for his petroleum conglomerate, Dalbit International, which operates in more than 5 countries in the African region. Humphrey is also interested in the African food crisis and how it relates to issues of agriculture and sustainable development.