An Assessment of The Efficacy of Local Content Policy in The Oil and Gas Industry in Uganda

Abstract

The discovery of petroleum in many oil rich countries in Africa has been seen to further underdevelopment, political unrest and pollution in these countries to the disappointment of nationals of these countries who would expect heightened development from the revenues and opportunities from the exploitation of the resource. One of the major contributors to the aforesaid is the market failure that is occasioned from the capital-intensive nature of the business, high levels of technology and expertise required in the exploration, development and production of Oil and Gas that restricts the participation of nationals in sector as they are ousted by the laws of demand and supply. In a bid to address these market failures, Governments in oil and gas rich Countries have found it necessary to introduce Local Content Policies to mandate the private sector that is dominated mostly by IOCs to as practically as possible to maximise the utilisation of domestic resources through the employment of more local people, the purchase of goods and services that are used as inputs in the sector form domestic suppliers, the encouragement of firms to localise their chains of supply, the encouragement and support of local firms that are struggling with the competitiveness of their inputs. Another area of interest is the creation of linkages (forward and backward) between the Oil and Gas Sector and other sectors such as agriculture, real estate and industry in order to achieve a broad based multi sectoral economic development. This research paper considers the concept Local Content and development in Uganda’s oil and gas industry, analyses the state of oil and gas industry today, the various policy and legal framework adopted in the realisation of Local Content in comparison to the other Jurisdictions such as Norway, Nigeria, e.t.c, the prospects and challenges this far. While the paper finds that Uganda has registered various successes in development of local content and national participation, it goes on to make recommendations that would help mitigate the challenges and better the level of national participation that would in turn contribute to the eradication of poverty and overall development of Uganda.