This document discusses optimizing local participation in African capital projects. It outlines that while everyone wants to maximize local benefits, local participation often achieves disappointing results due to mismatched expectations and capacities. To address this, the document recommends taking a collaborative approach involving stakeholders to set realistic goals and timelines, assess local suppliers, design tailored participation strategies, develop supplier capacities, and closely monitor results. It emphasizes keeping strategies simple, leveraging multiple disciplines, and involving foreign suppliers to help reduce risks and maximize opportunities and benefits for local communities and stakeholders.
Andrés Ramírez Gossler, Facundo Schinnea - eCommerce Day Chile 2024
2015 03 Local supplier and workforce participation optimization
1. 03/2015
Local Supply Participation in African Capital Projects
How to Maximize Opportunities and
Minimize Disappointments
Marc Escande
Global Director, Local Participation
2. 2
03/2015
Investors / owners
to build a strong,
sustainable social
license to operate
Who Wants to Maximize Local Participation In
African Capital Projects?
Everyone!
Local stakeholders
(governments,
communities, interest
groups) to maximize
sustainable local
benefits
Global organizations to help
reduce poverty and inequalities
So why is Local Participation in African projects still
achieving disappointing results?
3. 3
03/2015
The (Usual) Problem with Local Participation…
Expectations Current Capacities,
Capabilities and
Competitiveness
Intentions
Lack of
local
knowledge /
Fear factor
Excessively
ambitious
targets
Lack of
coherence and
substance in
development
plans
4. 4
03/2015
… and its Consequences if it is Not Addressed
Local
Participation
Inadequate Quality
Schedule
slippages
Owner cost
overruns
Operations
disruptions
Wasted public /
shareholder’s money
Disillusioned
communities
5. 5
03/2015
Optimizing Local Participation
LocalBenefits
Project start
Optimized LP
t
“LP as usual”
Operations Start
Stakeholders
involvement
Realistic
targets
Early program
start
Adequate LP
methods
Effective participants
development
Effective
Participants
engagement
Effective
Participants
promotion
Smart program
financing
6. 6
03/2015
Local
Stakeholders
Optimizing Local Participation
LocalBenefits
Project start
Optimized LP
t
“LP as usual”
Operations Start
Stakeholders
involvement
Realistic
targets
Early program
start
Adequate LP
methods
Effective participants
development
Effective
Participants
engagement
Effective
Participants
promotion
Investors /
OwnersLP
Collaboration
7. 7
03/2015
Collaboratively Building And Successfully
Executing LP Programs
Expectations Current Capacities,
Capabilities and
Competitiveness
Intentions
Realistic
expectations Building of additional
capacities and
capabilities / increase
competitiveness
Ensure effective
engagement of local
participantsLP
Target
8. 8
03/2015
The Proven Path to Collaborative LP Optimization
LP Program
Initiation
Local Participants
Assessment
LP Strategy
Design
Local Participants Development
Local Participants Engagement
LP Program Monitoring
9. 9
03/2015
LP Program Initiation
• What are the program quantitative and qualitative goals?
– During each FEL phase and ensuing operations
• Who are the targeted suppliers and individuals?
– Location, size, ownership, number, etc., - see illustration next slide
• How much will it cost to achieve the program goals?
– Filling the capacities and capability gaps of existing supply base
• Which local communities will be impacted?
– current level of expectation / resistance
• Which local business institutions will be involved?
– Government, industry association, chamber of commerce, education institution, etc.
• Which development institutions will be involved?
– World Bank, IFC, Regional development banks, UNIDO, etc.
• What will be the role of each party?
– Client, Hatch, Local business institutions, Development institution
• How will the program be managed?
– Steering Committee, frequency of meetings, level of authority
These questions must be answered in FEL1 to
adequately fund the development of LP plans in FEL2
10. 10
03/2015
Who Are The “Locals” Targeted By The LP
Program?
NationalRegional?Vicinity?
Ownership Type
(color, gender,…?)
Max Company
Size?
Ethnic groups?
Gender?
Age?
Unemployed?
11. 11
03/2015
Defining Realistic LP Goals And Estimating Associated
Costs Requires a Regional Economic Development Study
• Step 1: LP Program Ecosystem Assessment
– Project(s) supply scope (Capex and Opex)
– Local economy current state and business outlook
– Local interest / resistance to local developments
– Local supply base current state: Capacities, Capabilities, Competitiveness
– Local business environment maturity, typical Risks
• Step 2: LP Opportunities and Costs
– Identify the industry segments capable of benefiting from the LP program
– Estimate the time and effort required to bring specific supply segments to
adequate levels of competitiveness
• Step 3: LP Macro planning
– Propose multiple scenarios with associated expected benefits, costs and
duration
– Activities, teams, schedule
– Identification of financing options
12. 12
03/2015
LP Strategy Design
1. Local Suppliers Mapping
Entire
project
Package 1
Package 2
Package 3
Package 4
Package 5
Opex Cat. 1
Procurement
packages
Category A
Category B
Category C
Category D
Category E
Category F
Category G
Category H
Package
details
Local
suppliers
Client
SDB
Region
SDB
Industry
SDB
Hatch
SDB
13. 13
03/2015
LP Strategy Design
1. Local Suppliers Mapping
Package 1
Package 2
Package 3
Package 4
Package 5
Opex Cat. 1
Category A
Category B
Category C
Category D
Category E
Category F
Category G
Category H
Entire
project
Procurement
packages
Package
details
Local
suppliers
Local suppliers able to deliver full scope
Local suppliers unable to deliver full scope
Client
SDB
Region
SDB
Industry
SDB
Hatch
SDB
14. 14
03/2015
LP Strategy Design
2. Choosing LP Strategies
Localization target
Supplier
A
Supplier
B
Supplier
D
Supplier
E
Supplier
C
Estimate capability development
effort
Localization target
Building of new capacities
Local suppliers unable to deliver full package scope
Local suppliers able to deliver full package scope
And / Or And / Or
And
Unbundle Procurement
packages
15. 15
03/2015
Local Participation Strategy Summary By
Procurement Package
1. Local Participation Potential and Implications
2. Recommended Local Participation Strategy and Resulting Sourcing Plan
Created in FEL2
/
Updated in FEL3
18. 18
03/2015
Local Participation – Recommendations
• Set ambitious yet realistic and
non-ambiguous LP goals
• Build an integrated supplier
knowledgebase that can be
easily leveraged by any mining
project
• Develop an “LP Playbook” to
remove the LP fear factor from
investors / owners and
facilitate matchmaking
between local and foreign
suppliers
• Maximize internal awareness and
alignment on LP criticality and
proven path with a 2 Days LP
Executive Workshop
• Conduct an LP Opportunity and
Risk Assessment study to
understand the LP context
around your project
• Proactively reach out to local
stakeholders to jointly design
Local Participation strategies
Local Stakeholders Investors / Owners
Make it SIMPLE Make it CENTRAL
19. 19
03/2015
Local Participation - 7 Golden Rules
1. Build early, robust consensus on the LP program
2. Be bold
“If your dreams don’t scare you, they are too small”
3. Be realistic
Unachievable LP targets are the best way to destroy local benefits
4. Keep It Simple
“Complexity is your enemy. Any fool can make something complicated. It is
hard to make something simple”
5. Involve the 5 key Disciplines throughout the LP
Program
6. Leverage foreign suppliers
7. Closely monitor supplier performance
Pre-qualification, bidding, execution