A system thinking approach to addressing implementation challenges of local content policy in resource-rich countries.

The study espoused a multi-strategy approach-encompassing system thinking (ST) tool, which uses causal loop diagram (CLD) and mixed-method methodology to address local content policy (LCP) challenges of infrastructure, human resource capacity (HRC), technology and finance in the Ghanaian oil industry. ST considered the challenges as a 'system', thereby providing a comprehensive approach to identifying and analysing the interconnections among the variables affecting the challenges of LCP implementation. Underpinning ST and CLD is the concept of feedback, which allows complex issues to be viewed as an interconnected set of circular relationships. This therefore helps to provide a holistic understanding of an issue from different perspectives. The CLD was used to model the challenges of Local Content Development (and to provide sub-models of Infrastructure, HRC, Finance, and Technology with their attendant strategies). These models were then validated qualitatively. Additionally, a literature review and questionnaire were used to extract LCP lessons from two perspectives: developing and developed countries. The study of the comparator countries found that LCP implementation follows a worldwide trend: employment, procurement, training and technology transfer, and financial support to local firms. The Ghanaian LCP focuses on 'low hanging fruits', which are identified as being overly ambitious; they represent unachievable targets that are not suited to Ghana's developmental state, comparative advantage and lack of the prerequisite factors for effective implementation. These prerequisites include independent state institutions, adequate infrastructure, and credit facilities for local companies and suppliers. The lack of access to finance for local companies can be attributed to the lack of dedicated funding and the 'one-man company' syndrome, which is often not well structured, classifying them as high-risk for loans. The study uncovered two critical issues affecting local capacity building: policy coordination and harmonisation among stakeholders, and sustainable funding. The policy coordination should be threefold: the regulator (and related government agencies), academia and industry. These issues have been exacerbated by pervasive political interference in the administrative and operational functions of state oil and gas (O&G) institutions. This persistent interference has led to rent-seeking behaviour and the exploitation of the national oil company a 'cash cow' by the central government. An implementation strategy is developed based on political leadership, institutional strengthening, policy coordination and harmonisation, and a national development plan