Local Content Development & Competency
Many countries engaged in the development of their natural resources such as oil and gas or mining have introduced requirements for participation commonly referred to as ‘local content’.
This is increasingly so in emerging and developing markets mainly in Africa, Asia and Latin America. Local content requirements are mainly in the form of policy and regulatory measures that focus on increasing use of locally available labour, supply chain, technology and other resources.
As these markets develop and mature, their governments want their countries to be involved in a broader range of business activities. Most governments have either enacted or revised laws to make local content a mandatory component of doing business for all stakeholders of specified industries in their country.
One of the main intents of local content is to build up local capability through education, knowledge and skills transfer so that local people benefit from the development of natural resources.
So, what relationship does local content have to competency and skills development more widely?
Why Is Local Content Development So Important?
Governments, organisations and industry stakeholders recognise that local economic participation has benefits for organisations and communities alike. From a corporate perspective, local participation is seen as one means of maintaining a social licence to operate, by giving communities a stake in the project, as well as ensuring reliability of resources by having manpower and supply chain located nearby. From a community perspective, the participation of local citizens and businesses in the project is a means by which the benefits of resource development can filter into communities and the wider economy.
Fundamentals of Local Content Development
International companies are an important part of the supply chain and a key stakeholder in local content implementation. They bring investment, know-how and skills, which can further stimulate business opportunities and the pace of capacity building in the economy.
Governments of developing economies have increasingly been looking beyond just revenues that are generated to them from the economic rent through these international companies. The aim is therefore towards maximisation of the national value through employment, technology transfer and the acquisition of knowledge.
Competency and Its Role In Supporting Local Content Requirements
Competency is about having the necessary skills, knowledge, attitude, experience as well as the training needed to develop and maintain the standards required for a fully competent workforce.
Local content good practice is based on the idea of creating ‘shared value’ with skills and capacity building a key strand of this objective.
Skills development needs to focus on building capacity and competency for direct employment in the given sector and for services supporting that sector. There is a common belief however that if an individual attends training, he or she is competent. Training is a means of acquiring knowledge. Knowledge can be tested, but competence must be demonstrated on the job.
At present in many of the developing markets there is no proper system or institution charged with vetting the kind of development citizens need in relation to specific industries. Most of the development is based on individual organisational choice of development programs. Therefore, competency can play a key role in building, developing, demonstrating and evaluating the skills that relate to the given industry.
Regulators are increasingly putting more pressure on organisations to prove that their people are competent and not just trained. Legislation in many jurisdictions is demanding that people at all levels are competent and therefore demonstrating this competency is an important and real issue.
The benefits of an effective competency program extend to the individual, the organisation and to the industry. Some of the benefits achieved through competency development and assurance are:
Provides expectations so that employees know what is needed to be successful in their jobs
Increases workplace and environmental safety
Defines standards for minimum and best practices
Creates a skilled workforce based on defined standards
Identifies gaps in knowledge, skills, and abilities
Robust and successful competency programs provide a process that helps to ensure a standardised, valid, and reliable evaluation of employees’ competencies. These evaluations are designed to assess proficiency and determine developmental opportunities for each employee. Being competent provides for safer working conditions and career opportunities, as well as a number of other benefits to both the organisation, employee and wider economy.
Opportunities for building and developing skills vary along the value-chain, the development and implementation of competency is often undervalued. Supporting workforce competence and compliance can help contribute to developing a balanced and collaborative approach to local content development.
Local content initiatives focused on skills and training can go beyond the traditional approaches. Organisations can work to identify and select target disciplines and technical competencies to build a world-class knowledge transfer program that embeds these elements in the national workforce.
Local content is here to stay and will continue to gain focus, especially in developing markets. Organisations, particularly in natural resource industries around energy and mining, will be required to proactively include strategies focused on the long-term success of the local workforce, organisations and host country.