‘Local content policy can accelerate Africa’s economic development’
Sopuruchi Onwuka
Nigeria has proposed pan African local content policy implementation in order to assist the governments in the continent deploy their natural resources as catalyst for rapid economic development.
Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Felix Omatsola Ogbe, declared at conference in Namibia that Nigeria has already laid the model for continental adoption, adding that the country’s Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 represents a blueprint for adoption by other African countries.
In a presentation delivered on his behalf at petroleum conference which held in Windhoek, Namibia, Engr. Ogbe stressed the compelling role of local content policies in unlocking the full potential of Africa’s petroleum resources.
Nigerian delegate at the Namibian petroleum conference, Esueme Dan-Kikile (2nd right), delivers the presentation of ES of NCDMB, Engr Felix Ogbe at the event.
Speaking on “Local Content and Sustainable Inclusive Economic Growth,” at the conference, Engr Ogbe pointed at Nigeria’s successful implementation of policies and principles in driving the prevailing programmes on energy security, economic development, and industrialization across the continent.
The NOGICD Act, enacted in 2010, has fundamentally reshaped Nigeria’s oil and gas industry by ensuring that a substantial portion of the value created from the country’s petroleum resources is retained within its borders. This has had a ripple effect, spurring the growth of local industries, creating jobs, and contributing to overall economic development.
Since the enactment of the NOGICD Act, Nigeria has made remarkable strides. One of the most significant achievements has been the creation of over 30,000 direct jobs within the oil and gas sector. The job creation has not only provided employment opportunities for Nigerians but has also helped to build a skilled workforce that is capable of supporting the country’s industrialization efforts.
And the completion of over 15 million training manhours has equipped Nigerian workers with the skills and expertise needed to compete on a global scale, thereby enhancing the country’s human capital.
Engr Ogbe made it clear that the adoption of local content policies is vital for African countries aiming to retain a significant share of the wealth generated from their natural resources.
The NOGICD Act has also been instrumental in empowering indigenous companies by ensuring that more than 90% of oil and gas contracts are awarded to Nigerian-owned businesses. This has not only fostered the growth of local enterprises but has also reduced Nigeria’s dependence on foreign companies.
Again, the emergence of successful indigenous operators has been particularly noteworthy; these companies are now responsible for producing over 60% of Nigeria’s domestic gas requirements and contribute more than 15% to the country’s crude oil production. This shift towards local ownership and control has strengthened Nigeria’s energy security and reduced its vulnerability to external shocks.
Engr. Ogbe pointed out that the growth of indigenous operators is a clear demonstration of how local content policies can drive the development of a robust and competitive domestic oil and gas industry.
By ensuring that local companies have access to the necessary resources, including funding and technical expertise, Nigeria has been able to build a strong local supply chain that supports the oil and gas sector. This has had a multiplier effect on the economy, with the benefits of local content extending beyond the oil and gas industry to other sectors, including manufacturing, construction, and services.
Mr Esueme Dan-Kikile (2nd right) hosts other delegates to a discussion after his presentation at the Namibian petroleum confab.
The success of Nigeria’s local content policy is underpinned by six key pillars, which Engr. Ogbe identified as essential for any country looking to replicate Nigeria’s achievements. These pillars include a robust regulatory framework, thorough gap analysis, targeted capacity building, access to funding and incentives, robust research and development, and ensuring market access for local companies.
In Nigeria, the NOGICD Act serves as the cornerstone of the country’s local content policy. The Act provides the legal framework for promoting and monitoring local content in the oil and gas industry. It sets clear guidelines on how local content should be implemented, including the requirements for the use of local materials, labor, and services.
A thorough gap analysis is essential to identify the areas where local capacity is lacking. In Nigeria, regular gap evaluations have been conducted to assess the human capacity and infrastructure deficits in the oil and gas sector. This has enabled the government to develop targeted initiatives to address these gaps, thereby ensuring that local companies have the skills and resources needed to participate in the industry.
Capacity building is another critical pillar of Nigeria’s local content policy. The NOGICD Act mandates the provision of training and development programs to equip Nigerians with the skills needed to participate in the oil and gas industry. This has been achieved through partnerships between the government, oil companies, and educational institutions, resulting in the development of a skilled workforce that can support the country’s industrialization efforts.
Access to funding and incentives is crucial for the growth of local companies. The NCDMB has established various funding mechanisms, including low-interest, long-term loans, to support the development of local enterprises. These funds have enabled Nigerian companies to invest in technology, expand their operations, and compete effectively in the global market.
Research and development (R&D) play a vital role in fostering innovation and addressing the unique challenges faced by the oil and gas industry. The NCDMB has invested heavily in R&D to develop innovative solutions that meet the specific needs of Nigeria’s oil and gas sector. This has resulted in the development of new technologies and processes that have improved efficiency and reduced costs.
Ensuring market access for local companies is essential for the sustainability of local content initiatives. The NOGICD Act requires oil companies to give preference to Nigerian suppliers and contractors when awarding contracts. This has provided local companies with the opportunity to participate in the oil and gas industry and build their capabilities.
Nigeria’s experience offers valuable lessons for other African countries looking to leverage their petroleum resources for sustainable development. By prioritizing local content, African nations can ensure that the exploitation of their hydrocarbon wealth translates into broader economic gains, including energy security, industrialization, and job creation. The NOGICD Act has proven that with the right policies and commitment, local content can be a powerful tool for driving inclusive economic growth.
As the Namibia Oil and Gas Conference continues, leaders from across Africa are considering how to implement similar strategies to maximize the benefits of the continent’s estimated 126 billion barrels of oil and 614 trillion cubic feet of gas. With a robust local content policy, African countries can ensure that their natural resources contribute to long-term economic stability and prosperity.
