Increasing ‘local content’ in infrastructure procurement. Part 1

The funding invested in infrastructure construction in low-income countries (particularly the countries of sub-Saharan Africa) does not benefit contractors, suppliers and workers from those countries as much as it might. Increasing the input of local labour, goods and services could make a major contribution to economic growth and the achievement of the millennium development goals. This paper aims to show policymakers that expanding the local content of infrastructure construction is an achievable objective and to provide practical guidance on how to do it. Based on an extensive literature search, this paper (Part 1 of a double paper) shows that the procurement process can serve as a powerful tool to promote local content in infrastructure construction. However, a number of challenges are identified, notably the preference of clients, donors, engineers and the business community for expensive, high-tech and large-scale projects that are not within the capability of the local industry, as well as the failure of international agencies to balance objectives. In Part 2 of this work, some suggestions are put forward for overcoming the challenges and promoting specific policy objectives through minor changes to the procurement process.