Local Procurement Policies, Agreements, and Requirements

At a Glance

  • Local procurement policies vary widely in form and content. Some are suggestions while others are mandatory. Some include specific lists of goods and services that extractive firms must procure locally, while others indicate a target percentage of local products in total procurement.

  • When designing local content policies and assessment systems, it is important to consider their implications. What are the estimated costs of compliance for extractive companies and local suppliers? What are the administrative costs for the regulator?

  • To support the development of policies, agreements, and requirements that foster local purchasing, it is important to ensure that targets and objectives balance ambitions for future growth with a realistic assessment of existing capacity in the local business sector.

Case Studies

Key Resources

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Mapping the Oil and Gas Industry to the Sustainable Development Goals: An Atlas

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Backward Linkages (Supplying Extractives) Assessing Demand and Capacity

Backward Linkages (Supplying Extractives) Defining Local

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Measuring and Monitoring the Use of Local Suppliers

Backward Linkages (Supplying Extractives) Facilitating Linkages

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses

Backward Linkages (Supplying Extractives) Enabling Environments for Suppliers

Jobs from Extractives Understanding the Job Needs of Extractives

Jobs from Extractives Assessing Employment Potential and Skills Gaps

Jobs from Extractives Strategies for Job Creation In Extractives

Jobs from Extractives Building Required Job Skills

Shared Use of Extractive Infrastructure and Resource Corridors Sharing Water

Shared Use of Extractive Infrastructure and Resource Corridors Sharing Water Understanding What is at Stake

Shared Use of Extractive Infrastructure and Resource Corridors Sharing Water Opportunity Assessment

Shared Use of Extractive Infrastructure and Resource Corridors Sharing Water Negotiating Points

This resource examines the links between the oil and gas industry and the UN Sustainable Development Goals (SDGs), supporting a shared ...

Regulatory Structures and Challenges to Developmental Extractives: Some Practical Observations from Ghana

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Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements Government Regulations and Contractual Agreements

Jobs from Extractives Strategies for Job Creation In Extractives

This paper explores the role of regulatory frameworks in promoting and accelerating transformation and development in the mining sector. ...

Women’s Economic Empowerment in Oil and Gas Industries in Africa

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Backward Linkages (Supplying Extractives) Assessing Demand and Capacity

Backward Linkages (Supplying Extractives) Defining Local

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Measuring and Monitoring the Use of Local Suppliers

Backward Linkages (Supplying Extractives) Facilitating Linkages

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses

Backward Linkages (Supplying Extractives) Enabling Environments for Suppliers

These guidelines serve as a practical policy tool to increase women’s economic empowerment in African countries through increased ...

Women’s Economic Empowerment in Sub-Saharan Africa: Recommendations for Business Action

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Backward Linkages (Supplying Extractives) Assessing Demand and Capacity

Backward Linkages (Supplying Extractives) Defining Local

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Measuring and Monitoring the Use of Local Suppliers

Backward Linkages (Supplying Extractives) Facilitating Linkages

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses Mentorship, Training, and Skills

Backward Linkages (Supplying Extractives) Enabling Environments for Suppliers

Jobs from Extractives Understanding the Job Needs of Extractives

Jobs from Extractives Assessing Employment Potential and Skills Gaps

Jobs from Extractives Strategies for Job Creation In Extractives

Jobs from Extractives Building Required Job Skills

This policy brief examines barriers to women’s economic empowerment in Sub-Saharan Africa, with the aim of mobilizing private sector ...

How Does the Extractive Industry Promote Growth, Industrialization and Employment Generation?

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Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Forward Linkages (Supplying Extractives’ Downstream Sectors) Factors to Consider before Moving Downstream

This report discusses how developing nations can leverage extractive industries to meet the Sustainable Development Goals (SDGs), primarily ...

Developing a Transparent System for Local Contracting, A Manual for Practitioners Based on the eProcurement Experience in Chad

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Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Facilitating Linkages Supplier Portals

Backward Linkages (Supplying Extractives) Facilitating Linkages Qualifications and Standards Required of Suppliers

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses

This manual aims to provide step-by-step guidance on effectively introducing a transparent system for local contracting. The eProcurement ...

New The End of the African Mining Enclave? Domestic Marginalization and Labour Fragmentation in the Democratic Republic of Congo.

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Backward Linkages (Supplying Extractives)

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

This resource outlines literature on the African commodity global value chain (GVC). The authors challenge research that invalidates the ...

New Gender Diversity and Inclusion: A Guide for Explorers

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Backward Linkages (Supplying Extractives)

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements Extractive Industry Company Policies and Procedures

Jobs from Extractives

Jobs from Extractives Strategies for Job Creation In Extractives

This guide helps exploration and mining companies to not only understand gender diversity and inclusion but also to implement programs, ...

New Local Content Policies in the Mining Sector: Scaling up Local Procurement

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Backward Linkages (Supplying Extractives)

Backward Linkages (Supplying Extractives) Defining Local

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements Government Regulations and Contractual Agreements

Backward Linkages (Supplying Extractives) Facilitating Linkages

Backward Linkages (Supplying Extractives) Building the Capacity of Local Businesses

Backward Linkages (Supplying Extractives) Enabling Environments for Suppliers

This paper, part of the wider Local Content Guidance released by the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable ...

New Local Content Laws & Contractual Provisions, Case Study: Mali Petroleum

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Backward Linkages (Supplying Extractives) Local Procurement Policies, Agreements, and Requirements

This report, created by the Columbia Center on Sustainable Investment  (CCSI), summarizes Mali’s local content policies for the ...

Topic Briefing

Local procurement can be encouraged  and enforced through a variety of means. These include (i) informal company commitments, (ii) formal agreements between investors and affected communities (such as community development agreements), as well as (ii) government requirements and policy provisions. These are wide-ranging in their approach. Some simply indicate that local purchasing should be prioritized; others—backed by regulations and other enforcement mechanisms—require companies to locally procure all or a target percentage of specific goods and services.

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In general, all methods that set a target for local purchasing are useful in increasing the amount of locally produced goods and services. How such targets affect investors’ perceptions of a country, meanwhile, varies. Global experience shows that strategies to protect local businesses have positive, neutral, and in some cases adverse impacts on a country’s attractiveness to investors (adverse, if the requirements are not considered feasible). In addition, it is important to consider that measures seeking to increase local procurement beyond what the market dictates would normally result in short- and medium-term cost inefficiencies that in turn reduce taxable income and a country’s fiscal linkages. Overall, the competitiveness of local industries affects the efficiency and pace at which local content can be developed.

Strategies and tools to build local business capacity are discussed in other parts of the ELLED Framework.These include Mentorship, Training and Skills, and the fostering of an enabling environment.