Capacity building needed to facilitate local content in oil sector

Capacity building has become a core issue in preparing local content companies to take advantage of the upcoming investments of $20 billion within the oil and gas industry of Uganda.

Many developing countries have had little to show from the extraction of their resources largely due to some of the criteria for contracts that many local suppliers are unable fulfil. These include a lack the technical expertise, equipment and financial capability to undertake large contracts.

Speaking during the 6th Uganda International Oil and Gas Summit, Dr Hon Ruth Nankabirwa, the Minister of Energy and Mineral Development, said, “National content is being prioritised by putting in place clear policies and laws to guide the industry and build the capacity of Ugandans and Ugandan enterprises through skilling and capacity building.”

While thanking private companies, she emphasised their importance in supplementing the government’s efforts towards local capacity building.

According to the Petroleum Authority of Uganda, of the 1967 suppliers registered, 1329 suppliers are registered in Uganda and 582 are foreign registered. This indicates the role of the government’s local content requirements to create forward and backward linkages in the economy that will ensure high participation of Ugandans in the oil value chain.

Several private companies have added their efforts through scholarships for oil and gas courses, mentorship programmes, skilling academies, investment in technology transfer and skills transfer from foreign expats to locals within international companies. Additionally, private companies are incorporating policies within their recruitment that recruit locals and build skills that enable them to participate beyond the local space into the international workforce.

David Mparutsa. Head of Enterprise & Supply Chain Development at Absa Regional Operations, added that local content capacity building needs to focus on four pillars including ownership of assets, employment of locals, skills development and use of local suppliers. Building local capacity would in turn affect key areas of economic growth including unemployment, the trade deficit and work towards alleviating global supply chain disruptions through using local suppliers.

He concluded that once local content capacity is built, it is imperative for local companies to access financing. In order to make that financing accessible, financial institutions need to look to non-traditional ways away from collateralised lending to enable local companies to participate in the oil and gas industry. 

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