Local Content Policies in the Mining Sector in Zambia: A Synthesis of Its Benefits

Abstract

There has been lots of questions as to why there is continued marginalization of small and medium enterprises (SMEs) in the mines despite local content policies. A recent report regarding estimates of input goods and services to the mines in Zambia show an accumulation requirement of US$5 billion annually and the share of domestic firms in the mining market is less than 4 per cent, while that of indigenous firms is about 1 per cent. This raises lots of questions as to what extent local content help SMEs to supply to the mines. Local content policies are legal requirements to empower local SMEs so that a share of factors of production in form of labour, supplies of goods and technology required at various stages of the value chain is sourced from the domestic economy. A survey of 350 SMEs answered a questionnaire to determine how local content policies help them to supply to the mines.  It was found out that the local content only helped SMEs to improve their skills and capacity and not to help them supply to the mines or employment of the local people.  The study recommends that a mining commission of Zambia be formed with executive powers to enhance the inclusion of local SMEs to the mines. Further, a local content committee and economic empowerment must be institutionalized to improve the position of SMEs and enhance economic empowerment respectively

Keywords: Local content, global value chain, small and medium enterprises

DOI: 10.7176/EJBM/11-33-05

Publication date: November 30^th 2019