By Yemie Adeoye, who was in London

PUBLIC investment  in infrastructure such as concession of lands, industrial parks, utilities; transport, vocational education and training; trade fairs as well as  access to risk finance; tax policy; and technology support have been identified as instruments governments use to prevent the risk of ‘Double Market Failure’ in the growing quest for local content development.

Director, Local Content Solutions, Dr. Michael Warner, speaking on local content development around the world, noted that rules to ensure Local Content regulations drive supplier competitiveness and avoid unnecessary protectionism requires that state pays for the development premium, and public investment in business infrastructure, thus allowing contract award on international competitive basis.

He added that “Targets for growing competitiveness of suppliers, full, fair and reasonable access to opportunities for domestic firms, tender evaluation criteria for major contracts drive supplier development.”

Warner further argued that “Protectionism can best be defined as the economic policy of restraining trade between states, through methods such as tariffs on imported goods, restrictive quotas (including Local Content targets), and regulations designed to discourage imports, while competitiveness is a comparative concept of the ability and performance of a firm or country to sell and supply goods and/or services in a given market.

In the current global economic climate, the role of capital and operational expenditure by the extractive industries in stimulating jobs, skilling the workforce, growing supplier competitiveness and protecting or growing national strategic industries is of keen interest to host governments. Their Local Content and national sourcing expectations are, therefore, getting tougher.”

Some of the questions the forum tried to answer include: Have governments and their regulators gone too far? Has sufficient thought been given to the economic and commercial impacts of ever more stringent Local Content regulations?

And have companies been too short-sighted and too slow to fully embrace the new reality? How should regulators and companies drive industrial development through their procurement without taking on risks and costs, or fuelling protectionism?

Accordingly, Warner said the answers to some of the questions lie in the formulation of procurement strategy and tendering procedures. The procurement process and the experience and innovation of lead engineering and services contractors are currently under-utilised as vehicles to manage local content.

Rather than do these, instead, regulators simply mandate the desired levels of local content, and companies only report performance and undertake voluntary programmes to train nationals and support local business development