The topic of Local Content (LC) has been gaining more and more prominence in Mozambican society as national companies seek to exploit the opportunities arising from the major projects being set up in the north of the country. But there is still little understanding of the subject.
It was with this in mind that the Local Content Association of Mozambique (ACLM) decided to hold a workshop this Wednesday, 24 January, called “Induction on Local Content in the Oil and Gas Industry”, in which the organisation made it clear that “Local Content” should not be confused with Corporate Social Responsibility.
“There are many definitions around Local Content and there are many ways of looking at things. For Mozambican companies, Local Content is contracting or procurement; for the communities around the projects, Local Content has to do with the obligation that big companies have to build roads, provide access to water and build schools. Therefore, in these communities, what is thought of as LC is a bit of Social Corporate Responsibility,” said Elthon Chemane, president of the ACLM, explaining that LC “is a modern expression used to designate value creation and protection of the potential of local industries in the face of investment projects”.
The Association explains that CL aims to protect national businesses and labour, guaranteeing access to business and employment opportunities for companies and citizens, as well as promoting socio-economic growth and development.
“Local Content is not confined to the extractive industry, be it oil, gas or mining. It is transversal. So we have LC in tourism, agriculture and in various segments and activities of a country’s development,” said the source, emphasising that there are no “one size fits all” solutions, as all peculiarities must be observed.
Is it important to create a law on CL?
“This is a topical issue and many narratives have been generated around the creation of a law. It’s a sensitive issue. The point is that if such a law appears in the next two, three or four years, it will bring with it holes simply because it is subjective, because we don’t yet have enough experience to assess all the peculiarities necessary for its conception,” explained Elthon Chemane.
For the source, it’s important to have a law, but it’s necessary to bear in mind that this may not be the most appropriate time to put it into force. “For the oil and gas industry, other more flexible and organic instruments are recommended, such as regulations and a lot of other instruments that the government (the regulator) puts in place to create the rules of the game,” the ACLM official pointed out.
Elthon Chemane said that “the problem with a law is that it can’t be adjusted over a period of time, in this case five years. By the way, a regulation or a policy can be adjusted, improved or changed at any time, as soon as a need to do so is detected. So if a law isn’t well conceived, it can harm our side more than the industry itself.”
