Backward Linkages in the Manufacturing Sector in the Oil and Gas Value Chain in Angola

MMCP Discussion Paper No. 11

This study looks at backward linkages to the manufacturing sector in the oil and gas value chain in Angola as a potential driver of industrial development. The study employs a sub-sectoral approach rather than an aggregate (entire industry) approach in order to better capture opportunities and challenges at micro or firm level. The subsectoral approach is based on primary empirical research and complemented with secondary research. The primary research employed semi-structured interviews and scale questionnaires, and secondary research was based on a desk-study of the Angolan oil and gas industry through databases of specialist oil and gas research agencies. The study finds limited local content in the localised manufacturing function. On the one hand, there is high volume of local content in terms of human capital at basic and semi-skilled levels driven by local content policy. On the other hand, there is limited local content in human capital at higher technical level. In addition, the study finds no material inputs (processed intermediate materials) from the local economy into the manufacturing function. This is due to weak local capability i.e. poor metallurgical sector and scarcity of skilled labour. This situation is compounded by an incoherent local content policy which is skewed toward forward linkages, and a disjuncture between the local content policy and the national industrialisation policy.