The Economic Dynamics of Local Content in the Extractives Industry and an Analysis of Kenya's Local Content Bill of 2016

Abstract

East Africa rests on a new global focus that is attributable to the confirmation of the commercial viability of recent discoveries of oil, gas and minerals. With the new discoveries, and lessons learnt from other extractives economies around the world, Kenya is taking steps to protect its environment, promote the use of local content and catalyze technology and knowledge transfer. This in turn is expected will create wealth and a knowledge pool in the country thus enabling it to export not only extractives products but expertise too. This in turn is expected to steer the country away from the grips of the resource curse. This study defines local content in the extractives context, highlights the arguments for and against local content, shows the economic asymmetries that are intended to be cured by local content regulations as experienced in the African extractives industry, analyses the Kenya local content bill in light of the asymmetries and does a comparative study with other local content regulations in Africa. This study, through a desktop research and analysis, also analyses whether the local content bill of Kenya, as it is presented, addresses the asymmetries and questions its necessity in light of the magnitude of the natural resources discoveries in the extractives sector.