Local Content in the Hydrocarbons Sector in Africa in 2024: Assessment and Prospects (Kamel Koné)

The year 2024 saw an increased focus on local content in Africa's hydrocarbon sector. Faced with the need to maximise the economic benefits of exploiting natural resources, African countries have stepped up their efforts to encourage the participation of local companies, develop national skills and create jobs. Local content has emerged as a strategic lever in Africa's hydrocarbon sector, reflecting a growing desire on the part of governments and private operators to integrate local populations and national companies more fully into this key industry. We take a look back at the year's highlights and look ahead to 2025, with a mix of notable advances, persistent challenges and promising initiatives.

Highlights and achievements in 2024 :

A number of events and initiatives took place throughout 2024, reflecting the growing importance attached to local content:

• Adoption and strengthening of Local Content laws in Côte d'Ivoire : Côte d'Ivoire has adopted a new law on local content in hydrocarbons, aimed at ensuring greater participation by local companies in oil and gas projects. This law requires international companies to integrate more Ivorian suppliers and service providers.
• First Oil at the Baleine deposit in Côte d'Ivoire: Côte d'Ivoire has celebrated the first extraction of oil from the offshore Baleine field, operated by Eni. This event represents a major step forward for the country, which is counting on this project to boost its economy and maximise local content. The start-up of the second phase of development at Baleine has doubled production and opened up new opportunities for local businesses.
• Start-up of phase 2 of the Baleine deposit : On 28 December 2024, ENI and its partner PETROCI successfully launched the production of phase 2 of Baleine, enabling production to reach around 60,000 barrels per day. This step confirms Côte d'Ivoire's ambitions to reach a production of 200,000 barrels of crude oil per day in 2028, positioning the country among the leading oil-producing countries in Africa.
• Discovery of the CALAO deposit in Côte d'Ivoire : After Baleine, the Italian giant ENI has announced a new discovery with a potential of 2.5 billion barrels of oil and 3,300 billion cubic feet of gas, a discovery that reinforces Côte d'Ivoire's ambitions in its hydrocarbon policy.
• Production starts up in Senegal:The launch of oil production at Sangomar and progress on the GTA (Greater Tortue Ahmeyim) gas project have highlighted the importance of integrating local companies into the value chain. Senegal has put in place a regulatory framework that provides incentives for local content, encouraging partnerships and technology transfer.
• Increased investment : The increase in investment in the African oil and gas sector in 2024 (+23% according to Energy Chamber) has created opportunities for local companies, particularly in services, logistics and maintenance.
• In AngolaThe implementation of a technical skills enhancement programme for young people was hailed as a model of successful integration between the public sector and international operators.
• Nigeria, a historic leader in the field, continued to roll out its Nigerian Content Act, while celebrating record local integration rates in some projects, reaching as high as 54%.
• National initiatives: Several countries have strengthened their local content legislation and policies, setting quantified targets and putting in place monitoring and control mechanisms.
• Ghana: Thanks to the Petroleum (Local Content and Local Participation) Regulations, the country has seen a significant increase in the participation of local companies, particularly in the engineering and logistics sectors.
• Uganda: With the EACOP pipeline project, the country has integrated hundreds of local SMEs into the infrastructure work, creating thousands of direct and indirect jobs.
• Mozambique: Despite a complex security context, the country has seen an increase in local partnerships in the development of its offshore gas resources.
• Creation of the Future African Energy Bank: A major initiative in 2024 was the announcement of the creation of the African Energy Bank. This institution aims to facilitate the financing of energy projects on the continent, with a focus on the development of local content and the inclusion of African SMEs in the hydrocarbons sector.

These moments have reinforced the idea that local content can not only maximise the economic benefits of hydrocarbons, but also help reduce external dependency.

Country examples and good initiatives :

Some countries stand out for their advances in local content:

• Nigeria: Despite the challenges of declining production, Nigeria continues to actively promote local content through the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
• Angola: Angola has implemented an ambitious local content policy, with strict requirements for the participation of local companies in oil projects. The country also stands out for its proactive approach, combining tax incentives and skills transfer programmes.
• Senegal: With the start of production from the Sangomar oil field and future production from the GTA gas field, Senegal is implementing a strategy focused on skills development and local job creation.

Good initiatives :

• Training and skills development programmes: Numerous initiatives aim to train the local workforce in oil and gas professions, in partnership with educational institutions and international companies. Many countries, such as Algeria and Ghana, are also investing heavily in technical and vocational training for young people.
• Public-private partnerships: Collaborations between governments and oil majors, such as TotalEnergies, Woodside, Eni and BP, are multiplying to structure robust local ecosystems.
• Access to finance: Some countries, such as Angola, have set up specific funds to support local SMEs in accessing hydrocarbon markets.
• Local Content Development Fund: The creation of dedicated funds enables local businesses to be financed and supported in their development.
• Connecting platforms: Online platforms make it easier for local businesses to connect with international operators.
• Launch of the African Forum for Local Content: This annual event, held in Luanda in September, brought together policymakers, investors and experts to share best practice.

Problems and challenges in Africa :

Despite this progress, a number of challenges still stand in the way of realising the full potential of local content:

• Lack of technical and financial capacity: Local companies often lack the resources to meet the technical and financial requirements of oil and gas projects.
• Skills gap: Gaps in technical training remain a major barrier to local employment in highly specialised sectors.
• Weak infrastructure: The lack of adequate infrastructure can hamper the development of local activities.
• Limited access to finance: Local SMEs struggle to obtain the resources they need to meet the high standards of international contracts.
• Corruption and lack of transparency: Corruption and lack of transparency can hamper local companies' access to markets.
• Political and security instability: Political instability and security issues in some regions can deter investment and hinder the development of local content. Uncertainties in some countries, such as Libya and Mozambique, are holding back investment and complicating local integration.

Outlook to 2025 :

The outlook for 2025 is encouraging, with a continued commitment to strengthening local content. The priorities should be :

• Capacity building: Increase training and skills development efforts to enable local companies to move upmarket. Several countries, including Côte d'Ivoire and Mozambique, are planning to adopt new laws to further structure local content.
• Improving the regulatory framework: Putting in place clear and transparent regulations to encourage the participation of local businesses.
• Promoting partnerships: Encouraging partnerships between local and international companies to facilitate the transfer of technology and know-how.
• Digitalisation and innovation: The digital transition offers opportunities to modernise processes and increase transparency in the awarding of contracts.
• Economic diversification: Use hydrocarbon revenues to develop other economic sectors and reduce dependence on oil and gas.
• Regional integration: Increased collaboration between African countries could enable best practice to be shared and a continental vision of local content to be developed.

In conclusion, 2024 marked an important milestone in the promotion of local content in Africa's hydrocarbon sector. Efforts must continue in 2025 to meet the challenges and maximise the economic benefits of this industry for the people of Africa. It is crucial to transform natural resources into a genuine lever for sustainable and inclusive development.