‘Local content should drive linkages, look beyond economic rents’

Notwithstanding the growth witnessed in local content development in the country, indigenous participation in the oil and gas sector needs to look beyond the simple generation of economic rents, and instead focus on the development of linkages that will endear more growth and economic development.

This was the view of an oil and gas expert, Dr. Wisdom Enang while speaking on Nigerian oil and gas local content policy: Gains, improvement, opportunities, and imperatives for the future, at the just-concluded 4th Lawyers in Oil and Gas Conference and Awards.

Enang noted that local content has increased indigenous participation in crude production and exploration as well as a rise in the number of rigs and marine vessels owned by Nigerians from 3% to 40%.

Enang said: “With Nigerians developing competence in jobs that were the exclusive preserve of expatriates, most of the jobs that were executed outside Nigeria are now being performed by Nigerians and in Nigeria. This has led to the retention of a large chunk of the industry expenditure in-country, with the attendant positive impact on employment generation and growth of Gross Domestic Product (GDP).”

He however decried that a notable factor militating against local content development in Nigeria, remains insufficient funds for indigenous companies from Nigerian banks that impede the companies from participating effectively and efficiently.

Although the local content policy has led to increased opportunities for small and medium-sized enterprises (SMEs) in the industry, Enang noted that there are still several bottlenecks to the award of contracts to small businesses in the form of tedious prequalification and tender processes.

“The issue of non-compliance remains a highly debatable topic, with some schools of thought arguing that some multinationals continue to violate provisions of the Nigerian Content Policy through the use of expatriates from foreign technical centres, who perform job functions that Nigerians have the capacity to execute”, he added.

To bring about further development, Dr Enang said for the government to achieve the local content target, it must adopt initiatives to create an enabling environment for increased involvement of Nigerians in the oil and gas industry.

“To achieve full implementation of the local content policy, the government needs to embark on a series of market-oriented policy reforms to integrate the economy towards achieving competitive economic growth and globalization through the use of private sector-led socio-economic initiatives.

“The government must also encourage industrial development by granting liberal tax incentives and strengthening support for local institutions. The role of the small and medium scale enterprises, in realizing the effective implementation of the Nigerian local content policy cannot be ignored. They need to be encouraged and strengthened in terms of finance and operational regulations, because of the critical role they play in the development of the economy.

“The Nigerian local content policies need to look beyond the simple generation of economic rents, and instead focus on the development of linkages that will endear more growth and economic development of the oil-producing regions and the nation. Enforcing local content depends on the availability of an industrial-supply base that can act as growth levers”.

Enang also disclosed the need for a private-public partnership to reinforce the implementation of human capital development through the constant acquisition of skills and technical know-how. The Nigerian Content Research and Development Fund is a good starting point that can advance skills acquisition; however, the expertise of a broad range of research-intensive private and public universities should be actively leveraged to its maximum potential.”

He however added that actualising the goals of the Nigerian local content policy cannot be at the expense of quality, hence, indigenous companies must continue to invest in improving the quality of their products and services, and deliver the same to the Nigerian market at competitive prices.