- It is governed by numerous provisions
- It is a source of many opportunities for national companies,
- Overcoming the difficulties of meeting the mine’s norms and standards
What do we mean by local content? This expression refers to a set of measures and mechanisms put in place within the framework of mining conventions and contracts to compel companies to be more involved in the socio-economic development of a country. Local content can be equated with national preference. It is of paramount importance in the extractive sector. It can be measured in terms of the percentage of nationals in mining jobs, the transfer of skills to nationals, the training of nationals, the percentage of local goods and services used in the mining sector, the share of national financing in the sector, etc.
Local content also refers to the share of capital held by nationals, the percentage of local companies dealing with mining and local processing, etc.
The legal framework is favourable
Various legal provisions frame the issue of local content. The Mining Code provides for a 10% free participation of the State in the capital of mining companies. The Code provides that the State may take an additional participation on condition that it pays its contribution for the value of the shares acquired. The code provides for national preference for purchases and access to jobs in the mines. It obliges “mining companies, their suppliers and subcontractors to employ as a priority, with equal qualifications and without distinction of gender, Burkinabe executives with the skills required for the efficient conduct of mining operations”. It also obliges them to give preference to Burkinabe companies for any contract for the provision of services or the supply of goods under equivalent conditions of price, quality and time. The provisions of the Code encourage the anchoring of the mine in the local economy starting with the feasibility study.
It provides for a mechanism to finance local development through the creation of a local development mining fund.
For the effective implementation of local content, Burkina Faso has a national strategy for local content in the mining sector as provided for in Article 101 of the Mining Code. The objective of the strategy is to “promote local content in the mining sector in order to increase its impact on the national economy”. This strategy is built around three main axes which are: the improvement of the supply of local goods and services to the extractive industries; the development of local human capital in the mining sector and the local valorisation of mining products and the promotion of national investors in the mining sector.
Other texts promote local content, including Decree 2021-1142 of 11 November 2021, which sets the conditions for local supply in the mining sector. This decree aims to compel miners to promote the local supply of mining goods and services, to facilitate the transfer of skills and technologies to nationals, to enable nationals to take full advantage of the opportunities offered by the mining sector, and to make the mining sector a lever for sustainable socio-economic development in Burkina Faso.
The decree provides for the creation of a tripartite framework bringing together the state, mining companies and suppliers of goods and services for the development and monitoring of the growth of local supply for the benefit of Burkina Faso.
Opportunities but also challenges for local companies
The mining sector presents many opportunities for development. Operating mining companies have not waited for the texts to recruit local staff.
This is the logic behind the mining company IAMGOLD Essekane SA, which is a textbook case. With 2416 national employees by the end of 2022, almost all of them are nationals. The company is currently managed by nationals.
But national companies have to overcome some difficulties to meet the needs of the mines in sectors such as hydrocarbons, explosives, freight and transit, insurance, machinery and car rentals, spare parts, catering, security, IT, studies, etc.
The mines have a procurement plan and procedures in place to ensure the quality of the companies that will do the work for them. They check that the companies are registered with the government and tax authorities.
However, some local companies are experiencing difficulties. These include a lack of capacity to pre-finance (self-finance) contracts or to meet payment deadlines, lack of formalisation of companies, and knowledge of mining standards and procedures.
To overcome these difficulties, suppliers have formed an association to better share information on opportunities with mining companies.
Rachid Ouédraogo
