The myth of local content in Uganda’s oil sector: an eclipse of economic liberalism?

Abstract

This paper interrogates local content with specific reference to the oil and gas sector in Uganda. Three theoretical perspectives are reviewed – the local-content-as-national-content theory; local-content-as-good-corporate-governance; and local content as ‘smart’ industrial policy. It is this third perspective that guides our scrutiny of the local content credentials of Uganda’s oil policies and laws. To what degree is Uganda’s local content rhetoric reflected in the difficult but necessary task of skilling the nation (that is, the ‘citizens’); empowering local businesses, and, in short, creating a virtuous cycle of local ownership, job creation and inclusive development? The methodology adopted herein includes critical desktop reviews; scrutiny of the oil policies and laws; and key informant interviews. The emerging conclusion is that the demand for measurable local content dividends – defined in terms of job creation for nationals; use of national suppliers; utilization of local inputs; and, in short, the inclusion of nationals in the upstream, midstream and downstream of the petroleum value chain – is undoubtedly real. The supply, however, we contend, is disappointingly poor, leading to what we term the myth of local content. This is largely, but by no means exclusively, attributed to the eclipse of economic liberalism.

Keywords: local content, oil and gas, economic liberalism, Uganda