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IMANI cautions gov't against hasty implementation of "half-baked" local content policies

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IMANI-Africa on Wednesday says the impulse to institute local content policies for multiple sectors of Ghana’s economy needs to be checked in order to avoid hasty implementation of what it described as half-baked policies which consequences may be dire for the economy in the long term.
 
Presenting a research report at a forum in Accra, under the theme: “Is Ghana ready for more local content?, lessons for eight comparator countries in five economic sector”, a Research Associate, at  IMANI’s  Centre for Energy and Natural Resources, Barbara Andoh said it will be useful for the government and other public-sector agencies to develop comprehensive metrics and frameworks to appropriately track year on year achievement of local content targets or improvements in local content levels.
 
According to her, “the framework must include key indicators, milestones and outcomes as well as emerging risks and how they will be mitigated”.
 
This she said will facilitate the attainment of local content outcomes.
 
“Without a framework for appropriate tracking and measurement, it will be difficult to justify the need for other local content policies”. She added.
 
Barbara Andoh said:, “In line with tracking and measuring local content improvements, it is needful for the government to bolster monitoring of both local entrepreneurs and foreign investors in light of local content partnership, this will ensure compliance and facilitate the attainment of desired outcomes”.
 
She further suggested that, it will be necessary for public sector agencies that carry out local content mandates, to work in harmony according to an aligned local content agenda.
 
“The government should consider taking steps to bring all the agencies together to facilitate on-going discourse and engender harmony in their roles. It should also work towards eliminating duplicated, overlapping and conflicting roles”.
 
A key measure that will be helpful for setting attainable targets is capacity auditing, she mentioned.
 
IMNAI in its research report (June, 2018) said, “The government may consider investing into the design of a capacity audit system for sectors of the economy.”
 
This framework will be applied to ascertain existing capacity and how best realistic local content targets can be set and leveraged to achieve desired local content objectives.
 
Such a system is also necessary to determine whether there is existing capacity that can handle the requirements of local participation”.
 
“Another important point to consider, especially before extending local content policies to other sectors of the economy is the much-needed cost benefit analyses (or broadly, an assessment of current and future economic impacts) of local content.
 
This will help determine whether the benefits of local content in Ghana outweigh the costs (including opportunity costs) and whether it is worthwhile to pursue a local content policy rather than some other suitable alternative policy”. That’s according to Imani’s report.
 
This study explores the successes and challenges of comparator countries including Ghana, Botswana, Zambia, Brazil, Nigeria, India, Zimbabwe and South Africa in the institution of local content policies for five main sectors of their economies namely Oil and Gas, Mining, Coastal and Inland Water Shipping, Construction and Renewable Energy.
 
The aim is to extricate key thematic issues that hamper the achievement of local content objectives and t0 tease out lessons for Ghana.
 
Local content is an intricate concept which can be best appreciated in context. This is demonstrated by the fact that it is defined variously in different countries.
 
However, the crux of local content is to allow countries the opportunity to build capacity in economic sectors where they would otherwise have limited opportunity.
 
Therefore, local content policies generally require foreign investors to purchase domestic goods and services, employ and train citizens, transfer technology and know-how and to contribute to research and development‘
 
In Ghana, several initiatives have been taken over the years to build essential capacity through local content requirements.
 
However, in recent times, there has been a greater impulse t apply local content to several sectors of the economy through the use of distinct local content policies as pertains in the oil and gas industry.
 
Draft local content policies have emerged for the downstream petroleum sector, construction as well as coastal and inland water shipping Several other local content policies are being considered for power, agriculture, pharmaceuticals and cosmetics sectors.
 
 
 
Story by Edzorna Francis Mensah

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