The Moderating Role of Government Regulations Compliance in the Relationship between Capacity Building, Firm Capabilities and Local Content Consumption in Uganda's Oil and Gas Sector

Abstract

Purpose: This study examined the moderating role of government regulations compliance in the relationship between capacity building, firm capabilities, and local content consumption among firms operating in Uganda’s oil and gas sector. The study adopted a mixed methods cross-sectional research design. Data was collected from 280 firms registered on the National Supplier Database of the Petroleum Authority of Uganda. Data was obtained from Procurement Officers, Accountants, and National Content Officers using questionnaires. Data were analysed using descriptive statistics, Pearson correlation, hierarchical regression, and Structural Equation Modelling (SEM). The findings revealed that capacity building (β = 0.444, p < 0.001) and firm capabilities (β = 0.343, p < 0.001) have positive and statistically significant effects on local content consumption. Hierarchical regression results indicated that capacity building and firm capabilities jointly explained 36.1% of the variation in local content consumption (Adjusted R² = 0.361). The findings further revealed that government regulations compliance positively and significantly moderates the relationship between capacity building and local content consumption (β = 0.273, p < 0.001), while negatively and significantly moderating the relationship between firm capabilities and local content consumption (β = -0.128, p = 0.008). The study recommends strengthening capacity-building programmes through training, knowledge transfer, supplier development initiatives, and improved access to finance for local firms. Regulatory institutions should also enhance monitoring and enforcement of local content requirements to increase the participation of Ugandan firms in oil and gas supply chains. The findings highlight the importance of investing in capacity building, strengthening firm capabilities, and ensuring compliance with local content regulations to enhance the participation of domestic firms in oil and gas procurement activities and increase local content consumption.