The concept of local content which refers to the use of local goods, services, and human resources in the development of industries, is a proven tool for national development and building local industry. Globally, many countries have developed local content policies and strategies that have seen the development and growth of various sectors of their economies. For most developed countries, these local content policies were implemented before they were prohibited by the World Trade Organisation under the Trade Related Investment Measurers (TRIMs) Agreement. However, countries such as Kazakhstan, Nigeria, Botswana, South Africa and many others have successfully implemented local content by, among other things, establishing a legal framework that encourages local procurement. Similarly, Zambia launched the National Local Content Strategy of 2018 – 2022, as an interim strategy before the enactment of the Local Content Act. The strategy was aimed at increasing the use of locally sourced goods and services and fostering business linkages in specific growth sectors.
The extent and type of interventions in increasing local content have evolved from the restrictions on imports to more complex policies aimed at creating backward and forward linkages. These can include supplying input to the local economy through the transfer of technology and processing the sector’s output before export. However, while local content policies have the potential to drive economic growth and reduce dependency on imports, their success depends on the availability of skilled local suppliers and workers among other factors. Building capacity for local content development is therefore crucial to the success of these policies so that the ambitious LC policies do not create supply bottlenecks creating inefficiencies, or promote corruption. Local content development involves developing the skills, knowledge, and infrastructure necessary to support the production and delivery of goods and services locally. This can include training programs, developing local supply chains, and investing in infrastructure to improve logistics.
The mining sector is an identified sector in which the encouragement of local content development will catalyse growth of many other sectors including manufacturing. The mines in Zambia procure high quantities of goods and services to the value of $2-$4 billion annually. In the 2022 National Budget, the Government announced its aspirations to increase copper output to 3 million metric tonnes in a decade. Additionally, production of nickel has commenced at Enterprise Nickel mine, which is set to turn into Africa’s largest Nickel mine. These prospects together with Zambia’s performance in emerald and the recent discovery of sugilite indicate an increase in procurement in the mining sector. However, the African Development Bank (AfDB) report of 2019 states that local firms take up only 13% of the mining procurement budget on goods and services.. Some challenges cited for this low uptake of local goods and services are low quality goods and services, inconsistent supply, uncompetitive prices among others.
To overcome these challenges, the government must provide appropriate training programs, create a conducive environment for private sector investment in research and development (R&D) and establish better public-private partnerships. Partnerships between industry stakeholders, government, and educational institutions are key as industry stakeholders provide valuable insights to educational institutions and the government on the relevant skills and knowledge required in their respective industries. This results in training programs that are tailored to the needs of the local industry. Additionally, institutions such as the World Bank Group have offered support in supplier development programs in countries such as Kazakhstan, and Nigeria among others.
Furthermore, the National Science, Technology and Innovation Policy of 2020 provides a framework for managing and financing science, technology and innovation to enhance its development and application. Additionally, in the 2023 National Budget, the government has committed to modernising technical and vocational education and training (TEVET) institutions with state-of-the-art training equipment through the Skills Development Fund. This however needs a strong implementation plan and monitoring and evaluation to ensure effectiveness. This should further be coupled with upgrading the level of training offered by institutions to include digital technologies such as artificial intelligence (AI), machine learning (ML) and data analytics, skills currently being imported by the manufacturing and mining industry. SMEs should also be developed by enhancing their technical skills, managerial competence and financial acumen.
These efforts in building capacity are blueprints for the successful development of local industries. Additionally, campaigns such as the Proudly Zambian Campaign (PZC) are complementing these efforts through the Local Content Advocacy Initiative (LCAI). The LCAI seeks to increase the uptake of locally produced goods and services in the mining industry, supermarket chain stores and government procurement activities while identifying and building the capacity of local suppliers to increase competitiveness. These are fail proof solutions that have worked in various countries that can work in Zambia as well. To this effect, ZAM through the PZC will therefore host the Mining Local Content Conference and Expo between 7th – 8th September 2023 under the theme; Strengthening Mining – Industry Integration for Inclusive Economic Growth, as a platform to explore opportunities in local content.
The Author is Coordinator, Proudly Zambian Campaign at the Zambia Association of Manufacturers
