title: The role of institutions in local content policy implementation: the case of Ghana
Creators: name: Ahali, Aaron
Publisher: name: University of Reading
Year: 2027

description: The discovery of natural resources such as oil and gas in commercial quantities in sub-Saharan Africa (SSA) has brought about mixed results. Although most middle- and low-income countries in resource-rich economies in sub-Saharan Africa continue to be blessed with oil and gas, on the one hand, these resource-rich economies (RREs) also suffer exceedingly due to natural resource abundance. Undoubtedly vast deposits of oil and gas have proven to be a vehicle through which resource-rich economies can escape the poverty trap that engulfs them, but countries such as Angola, Chad, Cameroon, Democratic Republic of Congo, Mozambique, Nigeria, Liberia, Kenya, and Tanzania, despite the presence of vast oil and gas resources, have not been able to achieve the much-desired economic transformation, resulting in a circumstance where natural resources have become a curse rather than a blessing. Disappointingly, most resource-rich economies are still confronted with institutional challenges which hinder the effectiveness of local content implementation objectives. Rather, natural resource abundance has created a local capitalist elite class, to the detriment of the wider citizenry, resulting in the creation of an enclave in the oil and gas industry. Nonetheless, resource-rich economies in their quest for economic transformation using their oil and gas discoveries have adopted and implemented local content policies (LCPs) to fracture the enclave of the oil and gas industry and pave the way for economic transformation. It is important to mention that these policies have not produced outcomes similar to other LCP implementing countries such as Norway. This is the result of an array of issues such as poor institutional quality, political upheaval, persistently poor infrastructure, corruption, a deficit in technology, lack of capital, and the misalignment of policies in the broader economic and legal framework, all which are the crux of this thesis. These factors and others have impeded the economic aspirations of RREs. Nonetheless, RREs in Africa gifted with oil and gas resources have seen the presence of a large number of multinational oil and gas companies. These firms have re-located with intact linkages supporting their oil and gas activities, leaving no room for domestic market integration, creating an enclave in the oil and gas industry. The enclave nature of the oil and gas industry has led to an amplification of LCPs in most RREs in SSA which are oil and gas producers. Oil and gas discoveries in Ghana present an exceptional opportunity to boost economic growth and cascade the kind of prosperity the country desires. Oil and gas discoveries have high potential for a considerable positive effect on the Ghanaian economy and people via the creation of jobs, mainly through the stimulation of small and medium enterprises (SMEs). Among the RREs in SSA there are examples of both successes and failures in the use of resource-generated wealth. The spillover effects of Ghana’s discovery of oil on its economy and society are dependent on the kind of policies applied moving forward, including those associated with the use of institutional elements governing oil and gas management. Ghana has shown mixed macroeconomic performance in recent years, with considerable shocks being amplified by policy slippages resulting in external and domestic disparities. For instance, growth in 2016 was 3.5%, the lowest in two decades, but there was a recovery of growth in 2017–18, as a result of the discovery and production of oil, a decline in inflation, and lower imbalances as correct policies were implemented. The strength of this thesis lies in the fact that it deviates from other studies, as its overarching aim is to comprehensively investigate the role institutional quality and governance play in LCP implementation, using Ghana as a case study. Introducing institutional quality and juxtaposing it with local content is important. In 2017, the United Nations Development Programme indicated, among an array of other recommendations, that resource-rich economies, particularly those in low- and middle-income countries, must reinforce and institutionalise better governance as a major way of planting and nurturing the seeds of prosperity in Africa. This is a major consideration which gave the researcher the impetus to investigate this assertion in a comprehensive context.