Content development: Panacea for socio-economic problems

The Nigerian Oil and Gas Industry Content Development Act is the end result of many decades of attempts by the government and other stakeholders in the petroleum industry to ensure that the industry provides local value and maximum benefits to Nigerians. In over fifty years since the discovery of oil in Nigeria, the petroleum industry has functioned as an “enclave” economy, with very few, if any, linkages and very little contribution to the wider Nigerian economy.

Earlier steps taken to ensure that the local content policy becomes a reality includes the establishment of research, development, training, education and support funds. Provisions in the Petroleum Act on mandatory employment and training of Nigerians by the petroleum operators, provisions on technology transfer, local content utilisation, recruitment and training of Nigerian employees contained in the various contractual arrangements with the International Oil Companies (IOCs) and the establishment of the Nigerian Content Development Division (NCD) in the NNPC to monitor and give effect to government’s Nigerian Content Policy.

The scope of this Act includes all activities carried out in the oil and gas industry defined in the Act as all activities connected with the exploration, development, exploitation, transportation and sale of Nigeria’s oil and gas resources including but not limited to upstream and downstream oil and gas operations.

In the process of implementing the policy, it becomes necessary not only to continuously improve the engineering knowledge and expertise but also to develop the workshops such as foundries, forge shops, fabrication shops, machine shops, etc. to produce the plants and equipment required as well the spare parts needed to foster and sustain the maintenance culture that is universally lacking in our society as at now.

The NCD Policy was first conceived in the early 1970s when it was called Local Content Development (LCD) at the time the six or so vehicle assembly plants were set up as follows: Peugeot at Kaduna, Volkswagen in Lagos, Mercedes in Onitsha, Leyland in Ibadan, Steyr at Bauchi and Fiat at Kano.

The policy objective was to attain 80% local content for each of these vehicles within 10 years of their establishment. Unfortunately this policy was abandoned and largely sabotaged by the technical partners with the active collusion of the Federal and respective state governments.

Consequently only Peugeot is still functioning - only just. That the LCD policy failed is not in doubt as evidenced by the fact that virtually all the assembly plants are bankrupt perhaps with the possible exception of the Peugeot Plant at Kaduna. And certainly none of them had attained even 30% LCD.

What is needed for the effective implementation of the NCD policy is the creation of a new agency or a commission much like the Standards Organisation of Nigeria or NAFDAC or the EFCC with an independent Board of Directors and reporting directly to the President. Anything less would compromise and undermine the efficiency and effectiveness of the monitoring of the policy’s full implementation. The new agency should also be empowered to enforce its decisions otherwise it would be another toothless bulldog. It should be enabled to levy penalties such as fines based on the extent of infringement of the policy up to the power to close down the operations of the defaulting organisation temporarily or permanently.

The NCD policy can be extended to all the sectors of the Nigerian economy such as telecommunications (MTN, AIRTEL, GLO, ETISALAT, DSTV, internet, etc.), transportation (aviation, shipping, railways, roads, waterways, seaports, airports, dry ports, etc.), agriculture (commercial farming, irrigation, food processing, etc.), banking and insurance, broadcasting (radio, television, satellite, etc.), industries (power, chemicals, oil refining, cement, sugar, glass, metals, agriprocessing, defence industries etc.), hotels and tourism, services industries (consultancy, auditing and accounting, maintenance, ICT, Internet services).

A very important element of the NCD is not only concerned with the behaviour of corporate organisations but also that of individuals vis-à-vis this law. The worst violators are the smugglers for their activities negate all the gains derivable from implementing the NCD policy. Stiff penalties need to be introduced to check these unwholesome activities including heavy fines and prison sentences.

It is, therefore, a welcome development that the Nigerian Content Development Act is being introduced in the oil and gas industry which will not only enhance transparency in the industry’s operations but also open up this sector for Nigerian companies to fully participate.

We have also seen how the new Act will add tremendous value to the Nigerian economy leading to more economic activities in addition to the growth and continuing improvement of engineering practices and fostering of maintenance culture that is virtually non-existent in today’s Nigeria.

The new NCD policy, we have observed is not really new but a revival of the Local Content Development of the late 70s and early 80s introduced at the time the auto assembly plants were set up. We examined the reasons the LCD policy failed and cautioned that for the NCD policy to succeed, a new agency should be set up not only to monitor the policy but to enforce it. This approach would be more effective than the proposed Nigerian Content Department introduced in the NNPC. Such a Department would be mired in the red tape and bureaucracy of the company itself which in any case is not known for any measure of efficiency. An independent agency with its Board of Directors responsible directly to the President and provided with the authority to enforce its decisions.

After reviewing the positive effects of the NCD on the economy, we found it necessary to recommend that the policy be extended to all other sectors of the Nigerian economy. By the time this is fully achieved the Nigerian economy will be truly the biggest in Africa on a per capita basis!

In the course of implementing the NCD policy, we will find that innovation and competitiveness are crucial to the prosperity of any economy and none of which can be achieved without research and development (R&D) especially in science and technology. In advanced economies most R&D is conducted by corporations in their effort to beat their competition. R&D is expensive and is best funded by levying special taxes on public companies to be administered by an agency established for that purpose. Sabo Sodangi saboisodangi @yahoo.com