A number of studies have now concluded that natural resource endowment may neither necessarily accelerate economic growth nor induce people’s development (see Kolstad and Kinyondo, 2017; Auty, 1993). If anything, what the world is currently witnessing, is the fact that many nations endowed with non-renewable natural resources are paradoxically mired in economic stagnation and at times indicating negative economic growth (Kolstad and Kinyondo, 2017; Kinyondo and Pelizzo, 2015). Indeed, according to the Resource Curse concept, the abundant natural resources can increase the likelihood of adverse socio-economic outcomes and poor livelihood if mismanaged (Kolstad and Kinyondo, 2017). It follows then that natural resources endowment is not an automatic ticket to economic success.

The reality that natural resources do not automatically translate into benefits to economies and citizens of countries where natural resources such as minerals are extracted has recently been acknowledged by countries across the globe. To redress the situation, many resource-rich African countries including Tanzania, have embraced resource-nationalist legal frameworks to enhance the maximization of public economic rents, strategic public ownership and facilitate developmental spill-overs to local economies (see, e.g., Andrews et al., 2022; Huggins and Kinyondo, 2019; Kinyondo and Huggins, 2019; Kolstad and Kinyondo, 2017; Kinyondo and Villanger, 2017; Siri and Kinyondo, 2016).

In essence, many resource-nationalistic policies in African countries, have been drafted to enforce the regulation of the extractive industry to provide greater ownership to the state and local firms through local firms accessing various value chains and capturing bigger economic rents via taxes, fees, and royalties (Kinyondo and Huggins, 2019). It should be noted that one way to maximize local benefits is through increasing local participation in acquiring employment, training, and beneficiation and obtaining contracts to supply goods and services to the sector. Importantly, the need to increase local participation in the extractive sector has led to the introduction local content (LC) policies in many resource-rich countries, including Tanzania. Nevertheless, since the adoption of LC policies is a necessary but not a guarantee of success, the present study seeks to evaluate the efficacy of LC management and delivery in Tanzania.

The LC policies entail efforts to maximise local participation through the creation of employment opportunities, beneficiation, training and involvement of locals in supply value chains as contractors (Kinyondo and Huggins, 2019; Kinyondo and Villanger, 2017; Kolstad and Kinyondo; 2017; Siri and Kinyondo, 2016). When executed correctly, LC has a potential to provide a significant source of revenues to both national economies and locals. Moreover, it offers companies, communities, and governments an opportunity to unlock mutual benefits from resource extraction. This can happen through employment of core competencies and interlinkages that can be unlocked by facilitating local employment, beneficiation, training and procurement of local goods and services.

LC matters because research shows that up to 65 % of extractive companies’ revenues are usually covering operating and capital expenditure procured from suppliers with another 25 % going to employees through wage payment1 (see also Geipel and Nickerson). This means that, 85 % of revenues in the extractive industry can potentially be maximised by resource-rich countries in the presence of an effective LC strategy as opposed to potentially less proceeds from corporate taxes, royalties, and related fees which are charged on profits and are usually subjected to Base Erosion and Profit Shifting (BEPS) activities. It follows then that pursuing LC policies may have the potential to provide a lucrative alternative option.

Tanzania as an example of a resource-rich country, has also opted for resource nationalistic legal framework to realize the economic benefits emanating from natural resources available in the country. Specifically, the country has recently passed various laws establishing linkages between extractive companies and the local economy (Kinyondo and Huggins, 2019; Kinyondo and Villanger, 2017). As previously alluded to, the laws aim to enable local businesses, employees, and inputs to be given opportunities to participate in the extractive sector (Kolstad and Kinyondo, 2017). It should also be noted that developing LC has its own challenges, because of the many obstacles related to the need to have rightful business environment. Indeed, LC requires countries to have a skilful workforce, strong institutions and a vibrant industrial base that can easily be linked to the sector in question (Kolstad and Kinyondo, 2017).

Besides, LC success is highly dependent on the presence of strong governance structures, and where good governance is absent, it creates an environment which becomes a recipe for corruption. As experiences in multiple African countries such as Angola, Equatorial Guinea and Nigeria, corruption can enrich a small group of individuals, thereby becoming a breeding ground for the so-called resource curse in the form of political patronage and rent-seeking (Kolstad and Kinyondo, 2017). This shows that while LC may be necessary, it is insufficient in ensuring that most of the citizenry benefits from the extractive sector.

It should be noted that Tanzania introduced LC clauses in its legal framework as far back as in 1979. Indeed, section 37(1)(j) of the 1979 Mining Act,2 demanded that an application of mining license must be accompanied by a report on goods and services required in the mining operations that can be sourced within the country. This requirement is further emphasized in section 39(1)(e) of the same Act with a clause stating that no licence can be granted unless applicants’ proposals with respect to procurement of goods and services within Tanzania are satisfactory. Unfortunately, all LC requirements were omitted in the World Bank sponsored, Mining Act, 1998.

It is important to note that LC requirements in Tanzania, were brought back in full force in 2017, during the era of president John Joseph Pombe Magufuli (2015 – 2021). It is thus vital to gauge if that change has significantly impacted the development of local content in the country. This present study attempts to do exactly that by examining the effectiveness of local content in Tanzania in maximising local participation and corresponding gains in the extractive sector.