, , ,

Local Content Laws on the Rise in African Countries

Local Content Laws“An increasing number of African countries are enforcing local content laws, which were initially aimed at the mining industry, but are spreading to other sectors,” Jennigay Coetzer reported for Law.com in June 2022. Several nations across the continent are implementing such guidelines in an attempt to rejuvenate their individual economies. These maneuvers primarily benefit international economies, but there is some local gain, even if small.

Benefitting the Local Economy

When business is predominantly given to companies outside the local economy, the country in question sees funds trickling out to foreign partners, a move that does not immediately give money back to the local society. If businesses – across various sectors – were cultivated and engaged at the domestic level, however, the relevant economies would be better off. With the intention of financial improvement, several African countries have spearheaded legislation geared toward diversifying the status of their immediate economies.

The Need for Economic Growth

Economic diversification and generating job opportunities have been evaluated at a premium when it comes to building up economies in Africa over the next few years. A 2021 report authored by Doctors Sanusi Mohammed Ohiare and William Brent, and published by the Rockefeller Foundation, suggests that an important step in stimulating job growth on the continent would be to “consider local manufacturing opportunities for components like housing, mountings [and] cabling.” Not only would this create jobs in areas that urgently need them, but it could also improve housing options for citizens.

“Unemployment [in Africa] is increasing at a record pace,” reads the same report. “Unless stronger action is taken, 100 million young Africans will be unemployed in 2030…” And by 2050, estimates suggest at least 25% of the global population will be found in sub-Saharan Africa. A growing society, in turn, emphasizes the need for bettering the economy and consequently generating more jobs.

Improving Economies through Local Content Laws

As it relates to local content laws, Nigeria passed legislation over a decade ago that provides parameters regarding ownership rights, various services and the local job market. The country wants most people involved in its mining industry to be local. The same goes for oil and gas; the government hopes that as much as 70% of oil and gas services will come from businesses based in Nigeria.

Nigerian lawyers, too, have found increasing opportunities in recent years. Dayo Okusami, a partner at the Templars law firm in Lagos, says that 15 years ago, they would be hard pressed to receive and handle a significant case. In contrast, now they get their choice of the important projects across the legal market. This Okusami attributes to the “push for local content,” or local value, in Nigerian society.

Moving Forward

Other African countries are trying to accelerate their economies by adding laws similar to the local content provisions seen in Nigeria. Tanzania is another country that, since 2017, has added laws to better accommodate local employment and domestic value. Although this has definitely been a boon for local businesses (such as legal firms, just as in Nigeria), it came with some initial drawbacks. In 2017, several investors pulled out of Tanzania due to the government’s establishment of local content laws.

One Tanzanian law firm, Bowmans, is an example of an organization that appreciates the applicability of the country’s local content laws. Bowmans makes sure a majority of its equity is locally held. The same business model reportedly applies to Bowmans’ other divisions in Kenya, Malawi, Mauritius, South Africa, Uganda and Zambia. Such prioritization of local value may help stimulate the other countries’ economies.

If the governments of these developing nations can effectively enforce their local content laws, and can come through with the products and services that local and international companies require, then they can not only improve their economies but also their standards of living.

John Tuttle
Photo: Unsplash