22, September, 2016

Getting More out of the Oil and Gas Sector Lessons from Angola and Chad

This brief is based on new research into oil and gas Local Content policies in Africa, exploring successes with reference to Chad and Angola, and making the case for African countries to establish networking and training hubs to develop small and medium enterprises.

Several African countries have adopted Local Content frameworks as a mechanism to transform the short-term benefits of natural resource extraction into long term development – through institutional building and strategic policy tools to promote direct employment, skills development and the participation of local companies in the supply of goods and services in the oil and gas sector.

In Chad and Angola, the establishment of Enterprise Centres has proven a particular success. These Centres impart business skills to citizens and local companies, and facilitate the exchange of information between buyers and suppliers, to help streamline supply chains in the oil and gas industry. They have enabled local small and medium enterprises (SMEs) to access financing opportunities to support investment in capacity building, and brought the SMEs into processes to participate in large oil and gas contracts (for which quality standards are high).
Other African countries that are currently in the process of developing their own local content frameworks would benefit from establishing their own networking and training hubs to help empower their SMEs and citizens.

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Key Lessons:

  • Training programmes through Enterprise Centres should be developed targeting skills development in the local economy and promoting the long-term reputation of local companies as good corporate citizens.
  • African states should establish branches of Enterprise Centres in various parts of the country. This will ensure the widest possible reach in terms of capacity building of small and medium enterprises and companies with skills and competencies to engage in joint ventures like manufacturing with potential to create more skills and jobs.
  • African states should complement this training with access to credit. This will help companies expand and better compete with larger foreign firms working within the extractive sector. Financing of enterprises is important because, no matter how good their skills of suppliers are, they will not be able to win and deliver on contracts with international oil companies unless they have access to working and investment capital
  • African states should strive to improve the business environment as a whole as it is complementary in attracting investments from both local and international companies.

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