Nigerian Content Act And the Amnesty Programme

The oil and gas industry in Nigeria plays a crucial role to the sustenance of the nation and helps fuel her economic development. The industry has been widely described as the nations live-wire and literature abound on its role and significance.

The amnesty programme was designed to help bring sustainable development to the Niger Delta and build the human capacities of militants who embraced it.

Nonetheless, an estimated $8 billion is spent annually on servicing the industry such as fabrication, engineering, procurement, construction, Front End Engineering Design (FEED), conceptual designs and seismic studies. This figure is projected to hit $15 billion within the next few years.

Regrettably, despite these huge sums of money spent in servicing the industry, only a very little proportion of the accruable profit is spent in Nigeria. Bulk of the amount is repatriated abroad, where most of the equipment is manufactured; and providing employment opportunities for citizens of other countries.

The major reason for this situation has been attributed to low local content (LC), which most of the service contracts are awarded to foreign firms because local and indigenous firms lack the requisite skills, technical expertise, manpower and production capacity and capability to compete favourably.

Reasons for this are: deficient capitalisation arising from the tendency of Nigerian entrepreneurs to operate as “one man” business, capital and structural deficiencies associated with poor training and low managerial ability and inability to attract funds due to lack of suitable collateral and positive corporate image.

Low technological capacity; lack of funding from financial institutions, inadequate and incoherent policies/legislations; inadequate infrastructure; unfavourable business climate; lack of partnering between indigenous contractors and technically competent foreign companies, the inability of commercial banks to provide tenured loans to indigenous firms to execute project and that of Nigerian firms to foster appropriate alliances and partnerships with foreign firms, are attributable to  the low local content service in the oil and gas sector.

Historically, Nigerians have had very little share of the country’s oil wealth and there was an urgent need to reverse this trend as the country’s return to democracy eleven years after.

To address this anomaly, the Federal Government of Nigeria in the early 2000s introduced the Local Content (LC) policy, christened Nigeria Content  (NC) and it was primarily aimed at enhancing increased participation of local indigenous firms in oil and gas industry. The policy was targeted at transforming the industry through the development of indigenous capacity in the area of manpower development, facilities and infrastructure towards ensuring that a higher representation of local indigenous companies participate actively in the industry.

It was also aimed at reforming the industry into becoming the economic hub for promoting higher small and medium scale participation, job creation and base for industry growth; as well as for checking capital  flight away from the country. The crucial need for this policy cannot be overemphasised and even in recent times, the Speaker of Nigeria’s House of Representative was quoted as saying:

“It is important to note that while the oil and gas industry clearly dominates the Nigerian economy, a successful local content policy must be part of the comprehensive industrial and economic growth strategy for Nigeria as a whole … it should include both a plan for domestic capacity building and infrastructure development to broaden the national industrial base.”

The Nigeria content law, which was signed into law by President Goodluck Jonathan, will boost the amnesty programme of the federal government if adhered strictly to by stakeholders and those implementing the content.

The acting executive secretary of the Nigerian Content Board was quoted as saying that the Nigerian Content and the post amnesty programme are both designed primarily to give jobs to  more Nigerians, particularly in the oil and gas sector.

The greatest challenge facing the implementation of the act is the lack of awareness within Nigeria and slow methods of its implementation.

The Rivers Government should key-into this noble and very important act not only to provide jobs for those militants but to improve the human and infrastructural capabilities of the Rivers man to enable him tap into this gold mine.

Briggs Resides in Port Harcourt.

David Briggs