COVID-19 Pandemic – Lessons for local content practice in Nigeria
Imbibing the admonition of Winston Churchill’s “never let a good crisis go to waste”, in the novel COVID-19 pandemic, could be quite difficult. The world is in turmoil; hundreds of thousands of people have died and economies are plummeting.
Can any good come out of such a terrible era? It seems so, as Queen Duruibe, one of the many fashion designers in Aba, is thriving. She is producing face masks and other personal protective equipment (PPE). She switched to producing these items because of the demand since the beginning of the year. She is reported to be producing 10,000 face masks daily.
She joins an army of small businesses in the fashion industry in Aba, which have received support from the state government to produce items that are required to combat the pandemic. In a recent report on cnn.com, tailors in Aba have so far produced 200,000 face masks and 3,000 overalls, the Abia State Marketing and Quality Management Agency was quoted as saying.
It is a classic case of local content capacity meeting opportunity; albeit, inadvertently. In spite of the best efforts of Aba tailors, they do not have the capacity to meet demand for PPEs in Nigeria. Many countries, notably the industrialised nations hit by the pandemic, are struggling to get supplies for their medical personnel in the frontlines combating the pandemic.
COVID-19 is making countries realise why they should invest in local capacities to meet their needs. With the demand for PPEs and other items required for the management of the pandemic in short supply, medical shipments have been seized in national interest while some countries have ceased export of these items. In one of the most bizarre incidents, shipments of PPEs ordered by France from China were literarily hijacked by traders who paid a higher amount right there at the airport. So, you imagine if Nigeria had invested in its local fashion industry in a systematic manner and one which has backward integration even to the cotton farms, we may well be exporting PPEs.
Nigeria can do it. The country has successfully implemented a local content policy that has yielded great economic and industrial benefits in the oil and gas sector. Last week, the Local Content Act, which is the groundnorm for domesticating technical and commercial activities in the oil and gas sector that hitherto were either exported or controlled by expatriates and other countries, was 10 years old. The major objective of the law, in basic terms, is whatever job a Nigerian can and is qualified to do, it is forbidden that such jobs be given to an expat. Same applies to service companies. The legislation went further to create the Nigerian Content Development and Monitoring Board (NCDMB) to implement the law and also develop capacities of Nigerians and their companies to play strategically in the oil and gas industry.
Qualified Nigerians and local service companies will be particularly delighted at the growth they have experienced since the Local Content Act came into being. There have been many achievements, some of them signifying a turning point. While Egina FPSO, which was partly fabricated in Nigeria and a first of its kind, stands out as the apogee of growing technical and industrial expertise, the concomitant benefits are even more important. An engineering and fabrication yard was established in Lagos to integrate the FPSO vessel. Projects of this type will in future be fabricated in Nigeria and will no longer be exported. Indeed, Nigeria will likely attract FPSO fabrication and integration projects from oil producing hubs in Africa.
NCDMB has been fortunate to have visionary and highly competent helmsmen since it was established. With a sharp focus on the development aspect of its mandate, NCDMB, under Simbi Wabote, its current CEO, has been quite aggressive in deepening Nigeria’s role in the industry by laying the building blocks for an industrial transformation. Projects such as the oil and gas parks; establishment of modular refineries; Project 100 where indigenous companies with promise are supported to grow into industrial powerhouses; the Nigerian Content Intervention Fund, which eases access to fund for Nigerian companies and the 10-Year Strategic roadmap that has the potential to move local contribution to the country’s oil and gas industry from its current 37% to 70% by 2027. These major steps forward, among many others, show what is possible when there is a good mix of vision, planning and high capacity to implement the plans.
This model can be replicated across many sectors. Take health, for instance. When it was touted that the COVID-19 outbreak could be treated with existing medications, NAFDAC immediately requested a pharmaceutical firm based in Nigeria to produce millions of doses of the drug. The same drug has been the source of rancour between a leading economy and its close ally in Asia. Without the local capacity to produce the drug, Nigeria would probably have had a worse outcome during this pandemic.
The NCDMB has had to walk a fine line between deepening local content and attracting technical expertise and capital that Nigeria sorely needs. Focusing on growing local capacities does not necessarily translate to closing borders to foreign technical expertise and capital. Many sectors will benefit from deliberate actions to increase the productive capacity of Nigerians to meet local needs.
The number of COVID-19 infections is growing in Nigeria and across the world. The pandemic will most likely redefine globalisation. There is, however, no doubt that although it is a huge crisis, there is no better time than now to start looking inwards with a view to strengthening the country’s industrial capacity. The local content model in the oil and gas industry has worked excellently. This model can be replicated in many other sectors to grow the economy and guarantee the long term sustainability of Nigeria.