Government Regulation, Voluntary Codes of Conduct and Labor and Environmental

Protection: Examining Local Content Policies in West Africa’s Petroleum Sector.

Alexis RWABIZAMBUGA, PhD1.

Bentley College
Abstract

In recent years, the realization of the ever-increasing High Impact Gap (HIG) in Developing

Countries’ enclave sectors such as petroleum has induced host governments to draw up Local

Content (LC) policies that generally promote local sourcing and procurement of goods, services

and labor. Changing public expectations have also forced multinational firms operating in

enclave sectors to declare their commitment to integrating LC requirements into their corporate

practices. Drawing from experiences from West Africa’s petroleum sector development, the

paper examines the opportunities and challenges associated with current attempts to impart

labor and environmental protection practices to the sector though local content regulations. It

argues that in the specific context of West Africa’s petroleum sector, government regulation

alone may be ineffective in promoting change, unless it is concurrently supplemented by other

forms of voluntary regulation such as corporate codes of conduct. The paper concludes that the

application of both forms of regulation in this context may help establish pre-conditions for inter-

sectoral linkages and institutional development which are essential in enabling the achievement

of LC objectives.

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Key words: High impact gap, local content, labor and environmental protection, extractive industries,
voluntary codes of conduct, government regulation.

1 Dr. Alexis RWABIZAMBUGA is Advisor to the President, African Export-Import Bank, and
Visiting Fellow, London School of Economics and Political Science.