Absence Of Local Content Law: Nigeria Lost About $380bn (USD) To Capital Flight, 2 Million Jobs Within A 50-Year Period

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The 2022 Annual Valuechain Lecture and Awards has held in Abuja with mind blowing observations and corresponding recommendations made.

It is the 5th edition in the series of the event convened by MBdotCOM Media Associates, the publishers of one of Africa’s foremost energy magazines.

A communique issued at the end of the programme and made available to TV360 reveals among other things that Nigeria suffered a massive loss of $380 billion in capital flight with a further two million jobs due to the non-existence of a local content law within a period of 50 years.

According to the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, who spoke on the theme: “The Impact of Nigerian Content Law: Taking a Cue from the Successes in the Nigerian Oil and Gas Industry”made a case for the achievements recorded in the oil and gas industry through the implementation of the Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010 and the imperative for the Act to be extended to other critical sectors (automotive, real estate/construction, power and ICT) as these sectors could be key drivers of the federal government’s diversification programme.

The following observations were made by participants at the conference:

• The pragmatic implementation of the Nigerian Content Law in the oil and gas industry by the NCDMB has supported the critical task of nation-building and the actualization of some of the federal government’s policies and initiatives under President Mohammadu Buhari GCFR, particularly the drive for job creation, decade of gas, ease of doing business, diversification in the context of the economic recovery and growth and plan (ERGP).

• The situation in the Nigerian oil and gas industry before the enactment of the NOGICD Act 2010 was appalling. Nigeria suffered estimated loss of over $380bn (USD) to capital flight, 2 million jobs within a 50-year period and lost the opportunity cost for in-country capacity development and value addition. Hence, the cumulative Nigerian content level before the creation of the Board was less than five percent

• Through pragmatic application of certain provision of the NOGICD Act 2010, the NCDMB has recorded various landmark achievements in the oil and gas industry within 12years of its existence and grown Nigerian content level from 5% to 42% as at December 2021.

• The landmark achievements under the Nigerian Content Law leave visible footprints in the production records of indigenous operators, in-country capital retention, development of infrastructure, vendor development and supply chain efficiency, engineering and technical services, fabrication capability, human capacity development, job creation, asset ownership, procurements, manufacturing of critical oil and gas tools and components, and most importantly a paradigm shift in project execution philosophy of operating and service companies in Nigeria.

• The President has continued to reinforce local content practice in the industry through his total support for the Board’s programmes as well as the issuing of Executive Orders (EO: 3 & 5) that aim to promote local content in the public procurements and projects.

• There are currently before the National Assembly, three different bills seeking to extend local content law to other sectors. The Nigerian Oil and Gas Industry Content Act (Amendment) Bill 2020 (58.417); the Nigerian Local Content Development and Enforcement Bill 2020 (58.419); and the Nigerian Oil and gas Industry Content Act 2010 (Repeal and Re-enactment) Bill 2020 (58.420).

• Local content laws exist across the different sectors with various levels of successes in implementation but monitoring of compliance and enforcement are major challenges for regulators.

• One of the factors increasing cost is the local content provision, a situation where an important project has to be done but the local content provision is making it economically unviable.

Accompanying the observations were certain recommendations reached at the lecture with a view to mitigating any any foreseeable losses.

• It would be more efficient and successful to adopt a bespoke approach to the call to extend the Nigerian Content Law to other sectors, an approach which would consider the peculiarities of the various sectors intended to be covered.

• The MDAs with responsibilities to monitor or implement local content have a lot of learnings from what the NCDMB has done.

• The National Assembly should rather consider a sector by sector local content law approach as lumping the sectors together will not promote efficiency and effectiveness. The oil and gas sector is unique so also are other sectors like ICT. Therefore each sector will require a different bespoke local content approach.

• Local content implementing agencies should not see themselves as pro-government or enforcing government law but to see themselves as protecting the investors. The success of local content depends on manpower development and deployment.

• Nigerians should be strong advocates of the promotion of locally developed goods and service.

• Provisions in the NOGICD Act 2010 that impose fiscal burden on existing and new investors should be reviewed. Nigeria cannot afford projects not going forward simply because of the fiscal burden imposed.

The Valuechain was attended by H.E Vice President, Federal Republic of Nigeria, Prof. Yemi Osinbajo GCFR represented by the Minister of Petroleum Resources Chief Timipre Sylva (represented) with captains of industries, regulatory agencies, public sector, research institutions and the academia in attendance.

The following dignitaries featured in an enlightening panel discussions moderated by veteran broadcaster Mrs. Omotayo Omotosho, MFR: The Executive Secretary Nigerian Content Development & Monitoring Board (NCDMB) Engr. Simbi K. Wabote, the Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil & Gas Economics Management Prof. Wumi Illedare; President, Manufacturers Association of Nigeria (MAN) Mansur Ahmed and the DG National Information Technology Development Agency (NITDA) Mr. Kashifu Inuwa Abdullahi (represented).

 

 

 

 

 

 

 

 

 




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