Survey - Identifying local content challenges for extractive industries


Project Objective: To identify the top constraints and pain points multinational extractive companies face when implementing local content.

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Motivation and Objectives

Local content refers to the local resources that a foreign company utilizes or develops within a host country. This can include the procurement of goods and services from local vendors, employment and training of national workers, development of local business institutions, improvement of local technological capabilities, and joint ventures and partnerships. Since the 1970s, a number of resource-rich countries have enacted local content requirements in an effort to translate foreign direct investment (FDI) in extractive industries into sustainable economic development. These policies often require companies to meet certain quantitative targets for procurement, employment, joint ventures, and training.
Gaining a greater understanding of local content challenges is extremely important for companies seeking to enter and expand in foreign markets. While local content policies can provide many business benefits for companies, including improved government relations, supply chain performance, and social license to operate, they can also create steep challenges. As the prevalence of local content policies increases across resource-rich countries around the world, identifying top constraints is necessary to understand the inefficiencies and difficulties created by LCPs and to uncover cost effective solutions.

DAI, and Georgetown University, will conduct a rigorous study targeting a diverse and large sample of industry professionals. The study will identify the top constraints faced by multinational companies in the extractives industry and assess the extent to which patterns or categories of such constraints can be identified across multiple countries. Our findings will help industry anticipate and diagnose problems, thereby enhancing strategic decision-making, driving well-informed dialogue with governments, and improving future practices.

Methodology and Key Research Questions

Given the lack of available data, a key focus of this project will be original data collection. We will create a survey in order to reveal the primary concerns of companies within the extractives sector. Questions we seek answers to include, but are not limited to:
- What are the major categories of constraints?
- How do companies rank the importance of these constraints and/or categories? Which ones do companies rate as their top concerns and why?
- What are the differences across country contexts?
- What are the differences across types of professionals surveyed (e.g., engineer vs. strategy executive vs. procurement manager)?
- What are the differences across company size?
- What do we know about cost implications associated with the different categories of constraints?
- How are KPIs linked to local content objectives?
- How do companies collaborate/coordinate with local authorities and communities?

To answer these questions, the study will be divided into three pillars: a literature review, survey design and execution, and analysis of survey results, including descriptive statistics and (where and if possible) regression analyses.

Survey Design
  • Target: The survey will target professionals from oil, gas, and mining companies implementing local content in developing countries. Ideally, this survey will yield over 100+ responses, which will provide a representative sample for analysis.
  • Content: The main purpose of this survey is to identify the constraints these companies are facing with local content. The survey questions may cover (but will not be limited to): supply chain, finance, labor force, government relations, strategy and social investments.
  • Methodology: To obtain the largest possible sample size, the online survey will be designed to take only 10 minutes. It will include both quantitative and qualitative questions, and will be beta-tested by a small group of industry professionals whose feedback will inform the final version. Importantly, the survey will be designed to protect the anonymity and privacy of the survey takers.
  • Delivery: The final survey will be distributed and marketed to extractives industry professionals through online channels including but not limited to targeted emails, websites, and social media.

Survey Link