Creating a Regional Content Framework for the Oil and Gas Industry
: A Case Study of the East African Community

  • Rukonge Sospeter Muhongo

Student thesis: Doctoral ThesisDoctor of Philosophy

Abstract

The presence of oil and gas resources in Sub-Saharan Africa has brought both the gift and the curse. As Sub-Saharan African countries enjoy the abundance of natural resources such as oil and gas, on the one hand, these countries have also suffered immensely because of these resources. Oil and gas resources have proven to be vehicles driving economies out poverty. But in Sub-Saharan African countries such as the Democratic Republics of Congo, Angola, Nigeria, Tanzania, Mozambique, Kenya, Liberia, Chad and Cameroon, these resources have not been a blessing and in some countries leading to a resource curse. They have created a local capitalist elite class, at the expense of the population, creating an enclave in the oil and gas industry. However, Sub-Saharan African oil and gas producers have adopted and implemented policies such as the local content policy to crack the enclave of the oil and gas industry and propel economic development. These policies have not yielded similar results compared to other local content implementing countries such as Norway and Brazil. Mainly due to political instability, poor infrastructure, corruption, lack of technology, lack of capital, and the misalignment of policies in the broader legal and regulatory framework. Such factors have hindered economic development in Sub-Saharan Africa. However, oil and gas resources in Sub-Saharan Africa have attracted massive international oil and gas companies. However, there is an inflow of direct investment in the oil and gas sector. These companies have re-located with intact linkages supporting their oil and gas operations, leaving no room for domestic market integration, creating an enclave in the oil and gas industry. The enclave nature of the oil and gas industry has led to the proliferation of local content policies across the Sub-Saharan Africa oil and gas producers. This thesis using a comparative case study methodology makes an analysis on what factors affect the design of local content policies, why they thrive in developed economies but not developing economies as well as how these policies crack through the enclave nature of the oil and gas industry? The thesis makes a case study of six countries, namely Norway, Brazil, Nigeria, Tanzania, Kenya, and Uganda. The thesis uses energy justice as a theory to ascertain how national content policies equally distribute the benefits of the oil and gas industry while recognising all stakeholders following a legal and due process within the legal and regulatory framework. This thesis argues that national content policies are not suitable for developing oil and gas countries in Sub-Saharan Africa. The thesis concludes that developing countries should adopt and implement a regional content policy within the wider framework of their regional economic blocs. Through a regional approach, regions like the East African Community can leverage not only their natural resources but also the industrial parks, supplier clusters, regional financing mechanisms and regional training facilities through the agglomeration of economies. That will facilitate the domestic market to crack through the oil and gas industry enclave adhering to the tenets of justice namely recognition of all stakeholders, maintaining an equal distribution of benefits while legally following the due process.
Date of Award2021
Original languageEnglish
SupervisorRaphael Heffron (Supervisor) & Xuanli Liao (Supervisor)

Keywords

  • Local content
  • Regional Content
  • Enclave
  • Energy Justice
  • Linkages
  • East Africa
  • Oil and Gas
  • Energy
  • Resource curse
  • Indigenous development
  • East Africa Community

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