Local Content as an Instrument for Adjacent Industry Sector and Cluster Development

May 23, 2024

Article Written by Michael Hackenbruch , Senior Technical Advisor at CLC Solution

Michael Hackenbruch is a Senior Advisor for Localization, ICV, and ESG Strategies. He has over 20 years of experience in In-Country Value and Local Content strategies, sustainable sourcing models, and localization procurement with industry and the public sector in the MENA, Asia, and African regions.

Executive Summary

Since around 2000, traditional Local Content (LC) has functioned as an operational tool in the oil, gas, and mining (OG&M) industries, but its impact in these sectors has been relatively limited. This situation is mainly due to the specific technical, financial, institutional, and operational requirements that limit the engagement and enlargement of LC.

Local Content (LC) is a project-driven operational tool designed to integrate goods and service providers into the supply chain. However, training and qualifying a local workforce during the CAPEX and OPEX phases often results in limited stimulation of the local business ecosystem, leading to a relatively narrow impact.

Industry operators and national-level regulatory entities are encouraged to broaden Local Content (LC) requirements beyond linear supply chains in the oil, gas, and mining (OG&M) projects and foster LC frameworks that stimulate adjacent industry sectors and cluster development. This expansion would lead to a larger footprint, resulting in a more significant transformation of the industry ecosystem. LC policies, strategies, and regulations should encompass the emerging renewables sector and strategically valuable industries.

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