Making policies work


Discussion Papers (series)

Local content policies in mineral-rich countries: An overview

Discussion Paper 193

May 2016

Ramdoo, I. 2016. Local content policies in mineral-rich countries: An overview. (Discussion Paper 193). Maastricht: ECDPM.

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There is pressure from resource-rich countries’ population to derive more benefits from resource endowment, both on countries and companies. To address this, increasingly, resource-rich countries are searching for durable solutions to ‘disenclave’ their mineral sector, notably by developing and deepening economic linkages between the extractives sector and the rest of the economy. In this regard, an increasing number of countries introduced or reinforced local content policies (LCPs) with a view to stimulate the use of local factors of production, such as labour, capital, supplies of goods and services, to create value in the domestic economy and hence expand the industrial sector.

This paper defines the contours of the local content debate and illustrates the key highlights of what are the relevant issues regarding LCPs. It also highlights the conditions that are necessary to support LCPs and examines the types of interventions by governments, industries and local communities. Finally, the paper concludes by looking at the various ways of scaling up impact.

Key messages

  • Resource-rich countries are searching for durable solutions to ‘disenclave’ their mineral sector, but pathways to economic diversification have not been uniform.
  • An increasing number of resource-rich countries have introduced or reinforced local content policies to foster industrial development.
  • Local content interventions can be mandatory or voluntary and policies vary according to countries’ level of development, resource endowments and sectors’ maturity.
  • Success depends on ability to move from compliance to core-business mode, establishing functional enforcement and monitoring mechanisms, and fostering strong partnerships.

Read Discussion paper 193

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In addition to structural support by ECDPM’s institutional partners Austria, Belgium, Denmark, Finland, Ireland, Luxembourg, The Netherlands, Portugal, Sweden, and Switzerland, this publication also benefits from funding from the Department for International Development (DFID), United Kingdom.

Photo: Open pit mine. Courtesy by Isuru Senevi – Flickr

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Trade, investment and financeExtractive SectorsDiscussion Papers (series)MiningAfrica