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Content Act as tool to reduce unemployment

By Adeboye Fajemisin   |   16 December 2015   |   1:55 am
UNEMPLOYMENT

UNEMPLOYMENT

UNEMPLOYMENT represents one of the major spates affecting Nigeria’s economy. The Nigerian National Bureau of Statistics published unemployment rate in the country increasing to 7.5% in the first quarter of 2015, from 6.4% in the previous year.

It is recorded that unemployment in Nigeria averaged 11.93% between 2006 and 2015; having reached an all time high of 23.9% in fourth quarter 2011. A number of analysts have attributed the cause of unemployment in the country to factors including lack of requisite skills. This factor over the years has led to massive job exports, especially in areas of engineering, and other highly skilled professions.

The oil and gas industry in Nigeria represents a typical avenue for improvement in the unemployment record of the country. The effort of the government in creating a truly locally driven energy sector through the provisions of the Nigerian Content Development and Monitoring Board (NCDMB) represents a clear road map to the liberation of Nigeria’s economy. NCDMB’s vision to transform the oil and gas industry in Nigeria into an economic engine for job creation and national growth by developing in-country capacity will position the country as a hub for service provision for the oil and gas industry across Africa. This vision should be shared and supported by NNPC, the International Oil companies (IOC) and independent operators.

The Nigerian Content Act is no doubt a driver for economic growth, and a major consideration for the reduction in the ravaging unemployment rate of the country. This Act has the potential to stir up strategic alliances across the value chain of the oil and gas industry in Nigeria, leading to a good number of backward integration in skills and technology, enhanced training platforms, and knowledge transfer. This will result in the creation of Nigerian entities, providing direct and indirect support to the oil and gas industry hence creating job opportunities. The success of this Act in the oil and gas industry can be transferred and replicated in other sectors of the economy.

The country has witnessed a number of developments, especially relating to manufacturing capabilities within the oil and gas industry. This has led to an influx of FDIs, and strategic partnerships resulting in knowledge transfers, and in-country capacity increase. The legacy programmes of the NCDMB include FPSO Topside Integration Facility aimed at generating 30, 000 jobs and training opportunities, Pipe-Mills estimated to generate 15,000 jobs and 3,000 training opportunities, Dock Yards with a focus on NLNG and Brass LNG creating over 55,000 jobs and 20,000 training opportunities, and a Sub-sea Equipment Manufacturing Complex aimed at generating 5,000 jobs and 2,000 training opportunities.

One of the crucial in-country manufacturing prospects borne by the support of the NCDMB is the on-going construction of what is potentially the largest steel fabrication facility in West Africa; Technova Steel Industrial Park. Technova Africa Group is currently investing in an Industrial Park in Ologbo, Edo State with a $200 million Steel Pipemill and Pipe Coating Facility as the anchor project. It also plans investments of over $1.2 billion over a 10-year period in other areas of oil and gas engineering and fabrication within the Industrial Park with a potential to generate over 18,000 direct and indirect jobs. This sort of investments are highly welcomed and needed for the propagation of the Nigerian Content in promoting in-country value, retain more spend in-country, and get more Nigerians involved.

Also in the support service sector, Marine Platform Ltd (MPL) whose products and service are aimed mainly at the upstream oil and gas industry has actively contributed to the success of the Nigerian Content Act over the years. MPL has invested heavily and attracted a good number of strategic technical partners in areas of completion services, sub-sea services, and vessel chattering. Another typical example of entities borne out of the need to fulfill the provisions of the Nigerian Content Act is DeltaAfrik, which is composed of a strategic alliance between DeltaTek Ltd (100% Nigerian), and Worley Parsons. Delta Afrik has registered its presence as a Nigerian company operating to considerably full capacity with Nigerian professionals in the oil and gas, power and infrastructure sectors of the economy. DeltaAfrik’s successful execution of the Egina FPSO represents a major achievement accounting for one million man-hour composed of 80% in-country representation.

Despite the success recorded so far with the Nigerian Content, the lack of in-country financial capacity to undertake big-ticket transactions and inadequate infrastructure is a major challenge facing the Nigerian Content Policy. Another major bane to the continued success of the Nigerian Content Act is resident in non-compliance of the Act, especially on the part of the International Oil Companies (IOCs) operating in the country.

Also, considering the dearth in funding option available for Nigerian participation in the local oil and gas value chain, it has become even more imperative at this time that the government, through the NCDMB institutes and makes active more robust funding initiatives directed towards supporting capital requirements of the indigenous players who are participating in the local oil and gas industry. There is the need to institute a more transparent road map for accessing the funds set aside for the support of this venture, especially the Nigerian Content Development Fund, which is estimated to hit $700 million by the end of 2015, and intended to address financial and liquidity challenges of Nigerian companies. This would ensure that the fund is accessed only by credible Nigerian companies within the oil and gas value chain who have demonstrated their commitment to development of in-country capacity.

The Nigerian Government also needs to coordinate with its agencies to develop decisive and long term strategies which will ensure measured growth in the oil and gas industry by focusing on segments within the oil and gas industry and building them. For instance, the Backward Integration Policy on Cement and its success story is a testament to the possible outcome that can be derived from decisive strategies by the Nigerian Government. Nigeria is currently self sufficient in cement manufacturing and the industry is employing thousands of Nigerians 13 years after the Backward Integration Policy on Cement was implemented.

The contributions of the continued success of the Nigerian Content to the economic growth and development of the nation cannot be over-emphasised in terms of reduced rate of unemployment, increased economic rent, the GDP, and other economic growth metrics.
• Fajemisin currently resides in the United Kingdom.





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