Local content for a competitive edge in Mozambique

September 1, 2024

Thomas Rodriguez, founder and director of CLC Solution, talks to The Energy Year about growing awareness around local content and competitiveness in Mozambique’s energy markets. CLC Solution is a Franco-Mozambican local content consultancy company specialising in advisory services for the extractive and energy industries and public sector regulatory entities.

What makes Mozambique a good location for the establishment of a local content consulting firm?
I arrived in Mozambique to work on the Mozambique LNG project as a local content manager. We had good connections and sector knowledge in Mozambique, and that was something to capitalise on. Another reason is that I appreciated the will for change and openness of Mozambique.
The local content regulatory framework is still embryonic but there are discussions to develop a platform to build performance and to encourage the exchange of information. Oil and gas companies have communications platforms to express their views and report issues to the government to advise on challenges their activities face and advise on mitigation measures, including suggestions to support the business ecosystem.
CLC Solution aims to support proactive and open exchanges among parties to make the most of mega-project opportunities in Mozambique.

Why is local content important for companies in the energy sector?
Local content practices and performance are a baseline for continuous improvement and a factor in increasing the competitiveness of the local industry. Much like HSE or ESG, local content is supported by a vision.
It is demonstrated through standards and practices that support a qualitative contribution by a variety of local actors, such as suppliers or the local workforce, to project activities. Quantitative targets are defined through local content plans and standards are established within a local content policy, which sets the overall expectations of the state and the project operators.
Generally, there is still a lot of confusion regarding what local content is, how it can be implemented, and the value it can bring to the government and the private sector. When I ask different actors what local content means to them, I often get different responses. The topic needs to be properly framed and defined for employers to absorb it and make it part of their company culture.

 

How are local content requirements typically applied in Mozambique’s industrial sectors?
Local content is now an instrument recognized by various industries, and regulations now exist in many countries that encourage foreign companies to be more considerate of supplier and workforce opportunities and expectations. Many companies are now embedding local content requirements as part of their procurement process. When issuing tenders, local content plans are often required from bidders and are evaluated and weighted on a competitive basis.
Local content is a factor of differentiation and competitiveness; companies are required to acknowledge it and value it as part of their core business activities. It is part of a trend that reflects growing expectations about the contributions of foreign companies to the countries they are operating in. As an instrument for supporting local opportunities, it has specific practices and is required in a growing number of countries. Mozambique is no different and we should expect these expectations to be applied.

Can you provide a simple explanation of how local content rules work in practice?
There are mandatory requirements expressed in the form of quotas or targets that must be met. Priority must be given to Mozambican inputs, be they workers, companies or institutions. The challenge is to demonstrate the added value for Mozambique. These practices are generally tackled as part of operational processes such as procurement.
Operators of mega-projects get approval of their local content plans from the government. The plans are specific to project activities and include specific requirements for local sourcing and development.
Companies must demonstrate that they make a reasonable effort to employ and train the national workforce, to support the local supply chain and, where possible, to support the transfer of knowledge and technology to nationals. These targets are defined by the government and applied by major actors from the private sector who commit to meeting them.
Let’s not forget the importance local content holds for all Mozambican stakeholders. There are strong expectations, and inclusion and collaboration are key to managing them. The private sector considers local content as a means of growing their goodwill within the continent’s extractive industries.

What is on the horizon for CLC Solution in Mozambique?
We are excited about the future of CLC Solution in Mozambique, particularly with the continued development of Local Compass, a platform we’ve been enhancing since 2022. Local Compass aims to empower SMEs by providing decision makers with a clear view of their competitiveness in various domains, including overall business performance, quality standards and more.
Recognizing the challenges SMEs face in gaining visibility and managing frequent survey requests, Local Compass ensures that SMEs retain full control over their information, allowing them to share it selectively with relevant stakeholders.
The platform not only facilitates better data management and awareness but also fosters a more responsive and competitive business ecosystem. Local Compass enables SMEs to benchmark their performance against industry peers, providing valuable insights into their market standing. By analysing self-assessment data, training providers can design tailored programs that directly address the needs of SMEs, ensuring impactful and relevant capacity-building initiatives.
Our goal is to support SMEs in navigating the complexities of local content under rigid planning constraints, ultimately contributing to their sustainable growth and success. Looking ahead, we are committed to expanding Local Compass’s features and functionalities to further support business ecosystems, drive economic growth and foster deeper engagement within the business community.

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