Local Content accounted for 5% of Guyana’s economy in 2022, marking a milestone for the country’s efforts towards economic diversification and combatting the dreaded Dutch Disease. The Local Content Act of Guyana, which mandates the procurement of goods and services from Guyanese suppliers, has been successful in securing contracts for local businesses in its first year of operation, amounting to US$700 million.
With Guyana’s gross domestic product (GDP) amounting to US$14,370.9 million in 2022, the US$700 million generated through Local Content represents a considerable contribution to the country’s economy, which grew 62.3%. The non-oil economy also experienced strong expansion of 11.5% in 2022. This is, in part, a testament to the potential of Local Content to stimulate non-oil sectors such as manufacturing, construction, and logistics by creating opportunities for Guyanese entrepreneurs.
The resource curse can manifest itself when the sector associated with a resource boom grows significantly at the expense of other sectors. However, with Local Content, much of the value from oil companies’ spending is beckoned to stay in-country to grow non-oil sectors.
As the oil sector continues to grow in Guyana, Local Content is expected to play an increasingly significant role. The government is already planning to expand the categories in the Local Content Act, from 40, to at least 60, representing a stronger mandate for the procurement of Guyanese goods and services. The increase, according to Director of the Local Content Secretariat Dr. Martin Pertab, could bring in an additional US$300-350 million annually.
Exxon’s activities in the country will also contribute to the growth of Local Content. With increased exploration and production at Stabroek, as well as plans to drill 24 exploration wells at the Canje and Kaieteur blocks, spending in the oil sector is expected to surge. Additionally, government is expected to issue blocks at the conclusion of the ongoing offshore licensing round, which will result in an expansion of exploration activities. This presents a unique opportunity for Guyanese businesses to further capitalise on the Local Content Act and drive economic growth.