SarWatch Writer
Overview of the local content in the mining sector in Southern Africa

The mining industry is a significant revenue contributor for most countries in the Southern African Development Community (SADC) regional block, however, it has been noted that linkages with the rest of the economy remain rather weak. As a  response to this challenge, governments are shifting towards policies that stimulate stronger linkages between the mining sector and the rest of the economy popularly known as Local Content. Recently Southern Africa Resource Watch (SARW) published an overview of the Local Content regulations at a regional level and five SADC countries(the Democratic Republic of Congo, Mozambique, Zambia, Zimbabwe and South Africa).

On 15th July 2021 SARW hosted an online webinar to discuss its reports that aim to provide an overview of the legislative framework in five SADC countries regarding local content in the mining and hydrocarbon sectors. The webinar titled “Local Content Policies and Laws in SADC’s Mining Sector” saw panellists discuss the challenges faced by many resource-rich countries of translating billions of dollars of mining investments into broad-based and sustainable economic development. The webinar focused on the Local Content regulations on a global level and country-specific presentations on the Democratic Republic of Congo (DRC), Mozambique, South Africa, and Zimbabwe. The various authors of the Local Content report sought to evaluate the application of legal provisions on local content and sub-contracting in SADC and provided insights from the respective countries.

Various analyses have shown that local content legislation in Southern Africa needs to be improved to enable States and their populations to effectively benefit from the exploitation of natural resources. A presentation by Jeff Geipel, Founder and Managing Director at Mining Shared Value, a non-profit initiative that focuses on helping the mining sector and related stakeholders maximize local procurement of goods and services, outlined key considerations in developing a local content strategy for SADC countries. The presentation included recommendations as well as policy options that countries can consider to create in-country value-addition for mineral and petroleum raw materials. The full report of this overview can be found here.

In Mozambique, the local content strategy aims to promote added-value and local linkages through the use of national resources, however, the country is yet to finalise its legislation in this regard if it is to increase the benefits from extractive industries. This was a presentation made by Duarte Marques da Cruz, partner of the Portuguese law firm MC&A. The country’s legal framework includes local content provisions applicable to extractive industries, foreign labour employment, public-private partnerships, large-scale projects, and commercial concessions. However, these provisions are considered insufficient to effectively implement local content requirements in the country, mainly because of their ambiguity. They are most often written in the form of guidelines and general principles. A full analysis and evaluation of Mozambique’s mining sector Local Content legal regulations can be found here.

The DRC presentation by SARW regional Programme Director, Georges Bokondu Mukuli, showed that not all the provisions of the legal instruments relating to local content are implemented. In addition, Congolese legislation on local content is deficient in that it is incomplete and imprecise, particularly with regards to the setting of quotas and clearly defined deadlines for the results to be achieved. Nor does it contain categorical specifications in favour of vulnerable people (especially women, youth) and low-income people. The presentation highlighted important steps the Congolese government should undertake in order for the DRC to benefit from local content legislation, such as the adoption of a general law on local content in the country following the examples of other countries such as Senegal. Find the report here.

In Zimbabwe, the government is following the example of many mineral-producing countries by noting the integral value of local content and its link to the mining sector.  As a result, policies and legislation have been developed to give effect to local content to ensure economic diversification of the mining sector through employment, business development and accelerated skills and technology transfer. However, in order to take full advantage of economic opportunities and to achieve sustainable growth and development of the country’s mining sector, the government will need to make further efforts. A presentation by Veronica Zano, SARW’s Governance, Research & Policy Officer, showed that Zimbabwe recognises local content as part of the policy’s broad strategies and instruments which will be adopted to facilitate Zimbabwe’s industrial sector to become an engine for sustainable economic growth and development. Read the full legal and policy framework for local content and sub-contracting in Zimbabwe here.

In South Africa, local content is a defining feature of modern mineral policy and regulatory regimes. It is also incorporated into mining development agreements to create opportunities for local entrepreneurs and Historically Disadvantaged South Africans. Although the Mineral Council of South Africa and others have expressed concerns that local content procurement objectives and requirements are too onerous and could reduce investment in the sector, they are sometimes in conflict with international trade agreements. Martin Mosweu, SARW Programme Officer presented on the evaluation of the application of legal provisions on local content and sub-contracting in South Africa. The full country report can be found here.

Zambia does not yet have a local content policy, but the country does have several sector policies aligned with Vision 2030 that can be considered the main policy driver, supporting growth, industrialisation, and local content development. However, it does not include subordinate legislation, which is in fact the main instrument for the implementation of development policies and plans. A full analysis of the local content and sub-contracting legal framework in Zambia can be found here.

The expected effects of local content legislation in Southern Africa depend on the capacity of the governments of these States to implement the provisions of the laws and policies enacted, to monitor their enforcement, and to impose sanctions in the event of non-compliance.

Local content measures alone are generally not sufficient. They must be accompanied by local content development measures and financial support. These are levers for strengthening the long-term competitiveness of local resources. Examples of such measures include education and training; research and development and innovation; capacity building of local firms; technology transfer or yards (construction sites) for production.

The video from the webinar can be found here.

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