Local Content Policies: Building Capacity for Positive Change - Essay Sample

Introduction

The government uses local content requirement policies to encourage the firms to develop and use local skills to operate in an economy. The companies commit towards building the capacity of the local community to support long term development of the sector. The local content promotion leaves a positive legacy in the host country or community since people are equipped with skills that transform their lives. The local content requirements policies are advantageous as they establish a local workforce that is not only skilled but also motivated to control future development.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

The primary role of local content is to build local capacity by fostering skills that are beneficial in carrying out various functions, solving problems as well as defining and attainment of objectives (Ado, 2014). Local content policies help in promoting the local communities as they are trained in different areas. The community members can use the skills obtained in development projects that positively change their lives. When a company is set up in a community, it can, for example, train and mentor some youths and later consider them for opportunities available in the company.

Local content policies can help solve unemployment among the youth through the fundamental goal, which is capacity building. The capacity building aims to foster skills that are beneficial in carrying out various functions, solving problems as well as defining and attainment of objectives in a particular sector (Ado, 2014). The local community benefits from the local content through the transfer of technology. In some instances, the foreign companies have advanced technology which they transfer to the locals and the locals adopt them in development of their economy. Foreign companies benefit the locals as in some cases they are required by the government to employ local manpower in its activities.

Local content initiatives and policies are measures taken by the government to make local communities benefit from the operations of foreign companies. The communities face challenges while trying to utilize the opportunities provided. Several factors make the initiatives of the local content to help the locals (Ado, 2014). The challenges include the lack of capacity by the local communities to be integrated by the companies that operate and exploit minerals in their community. The community is required to have the capacity to benefit from the operations of the company. The companies engage in activities that require knowledge and expertise, and therefore if the people from the community lack the experts, they will end up losing the opportunity. The community will not benefit.

The state policies cannot force the company to provide opportunities to the local community if the local communities do not have the capacity of utilizing the opportunities (Ado, 2014). The government also wishes to build the capacity of the local companies by making foreign companies to source their raw materials from the local companies. There are times when local companies are forced to invest in new technologies to be able to produce products of high quality. Local companies end up getting improved their capacity of producing high-quality products in large quantities.

The local content policies need to make the companies build the capacity of the people from the local community (Ado, 2014). The locals might lack the knowledge and expertise required but can be trained to get the skills that the company requires. Training the locals equips them with the skills that they can to solve the challenges that they go through while trying to exploit the resources that they have. The local content policies should be specific to the type of building capacity that the company needs to provide to the locals.

Some companies utilize local content not to meet legislative requirements but to impact the society both socially and economically positively. An oil and gas company can, for example, train civil and mechanical engineers and then give them opportunities to help in the attainment of company objectives. The companies can also promote the local content by procuring a certain percentage of inputs from the local people (IPIECA, 2011). Through such practices, the economy of the local communities develops, and their living standards improve.

Through the local content policy, the government requires foreign companies to develop and use local skills and inputs to operate in the economy (Ado, 2014). Before a company can be allowed to operate in a particular community, the government requires them to obtain a social license. A social license to operate refers to the level of acceptance or approval of a company by the local communities and other stakeholders.

Even if a company obtains regulatory permission, it also needs "social permission" to conduct its operations (Dare, Schirmer, and Vanclay, 2014, 88). If a company does not get a social license government agency will be reluctant to give them operational licenses or permits. A company can, for example, attract and maintain a social license to operate by ensuring that they are environmentally friendly. A company that does not properly dispose of its industrial waste is likely to face rejection from the local community. A company can also maintain social permission to operate by ensuring that they do not use raw materials that degrade lead to deforestation. A company can ensure that its packaging materials are biodegradable.

Majority of the oil and gas producing states are introducing local content requirements as a strategy of managing legacy (IPIECA, 2011). After they get a social license to operate in a particular community, they ensure that they positively transform the members of that society through various strategies such as training and development as well as technology transfer. Some companies do not promote local content because it is a requirement but because they consider this a responsibility to the host community hence the reason why local content promotion transforms the host community.

When a compare ensures that they safeguard the environment in which they operate in the members of the community feel appreciated and part of the company (Organization for Economic Co-operation and Development, 2016). The skills and knowledge passed to the host community help them in problem-solving as well as development. The impacts of a company are likely to be felt even after they quit operations in that specific location.

There are significant differences between local content and corporate social responsibility; the differences include the mandatory nature of the local content where the government has come up with policies that require companies to give back to the local community (Ado, 2014). Local content ways of giving back to the community, including through building the capacity. The company train locals to equip them with the skills that the company requires hence improving their skills and ability. On the other hand, corporate social responsibility does not build the capacity of the local community. Corporate social responsibility does not engage in capacity building; it only engages in discretionary activities such as building infrastructure to compensate local communities.

Local content is also highly involved in technology transfer; the companies come with their technologies to help in the extraction of the minerals (Xue, 2017). The host country might not be advanced enough to use such technologies; hence, the policy is to train the locals on how to use the technologies. On the other hand, corporate social responsibility does not use technologies while giving back to the community. The company engages in activities that it wants while giving back to the community. There are fewer technologies used in corporate social responsibility.

There are specific activities that companies are required by the law to engage in in the case of local content; in most instances, the government has entered into a contract with the company (Xue, 2017). In the case of corporate social responsibility, it's not a requirement by law or any policy for the company to engage in corporate social responsibility. The company wishes to give back to the community to improve the relationship between the company and the local community. Some companies even do not engage in corporate social responsibility.

Conclusion

In conclusion, local content is used by governments in ensuring that the local communities benefit from the activities of the companies at the local level. Some companies opt to give back to the community that they operate in the form of corporate social responsibility. Local content enables the local community to benefit from the activities of the foreign company. It ensures that the people utilize the opportunity provided by the foreign company to help the people grow and the economy to grow.

References

Ado, R., (2014). In search of the link between local content and corporate social responsibility in petroleum operations. [Online] Universitypublications.net. Available at: http://www.universitypublications.net/ijbms/0301/html/R3ME139.xml [Accessed 6 Jun. 2019].

Dare, M., Schirmer, J., and Vanclay, F., 2014. Community engagement and social license to operate. Impact Assessment and Project Appraisal, 32(3), pp.188-197.

International Petroleum Industry Environmental Conservation Association (IPIECA), 2011. Local Content Strategy: A Guidance Document for the Oil and Gas Industry. Online: http://www. ipieca. org/publication/local-content-strategy-guidance-document-oil-and-gas-industry.

Organization for Economic Co-operation and Development (2016). Trade Policy Note. [online] Oecd.org. Available at: https://www.oecd.org/tad/policynotes/economic-impact-local-content-requirements.pdf [Accessed 6 Jun. 2019].

Xue, F. (2017). Difference between Local Content and CSR. [Online] Research Gate. Available at: https://www.researchgate.net/publication/321713611_'Local_content'_of_corporate_social_responsibility_in_international_construction_business [Accessed 6 Jun. 2019].