Making Foreign Direct Investment Work for Sub-Saharan Africa: Local Spillovers and Competitiveness in Global Value Chains by Thomas Farole; Deborah Winkler

Author:Thomas Farole; Deborah Winkler
Language: eng
Format: epub
Publisher: The World Bank

More recently, in response to regulation developed by the Ghana Minerals Commission, the major mining companies have undertaken a collective effort through the Chamber of Mines to identify and support realization of opportunities for local production of inputs or local service provision. In particular, they have started to support development of capabilities in manufacturing, as well as manufacturing of more technical products (for example, crusher liners). The initial stage of this process identified products representing an opportunity for production/delivery in Ghana, based on scale of requirement and perceived ease of production in Ghana.

In Canada and Australia, where there is significant political tension over mining activity on the land of aboriginal communities, community participation agreements are signed prior to mine construction that identifies contract set-asides for local suppliers. The contracts are then often not tendered but negotiated with local firms directly. Contract set-asides are also in development in Mozambique at Rio Tinto’s proposed coal mine, supported by an in-depth analysis of goods and services with local procurement potential.

Due to the important role that EPCM and primary contractors play in mining operations, some mining companies ensure that local procurement commitments are also written into contracts with their primary contractors (box 5.7). By incentivizing local procurement at an EPCM level, mining companies support the broadening of opportunities for local suppliers and SMEs. EPCM local procurement requirements are not a feature of mining agreements in Africa, but these requirements are becoming more prevalent in Canada and Australia.

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