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Wabote: How Absence Of Local Content Law Cost Nigeria $380bn Capital Flight, Two Million Job Losses

Leave a comment | | August 1, 2022 6:59 pm

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The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote has said Nigeria lost a whopping $380 billion in capital flight as well as two million jobs due to the non-existence of a local content law within a period of 50 years.

Speaking at this year’s Annual Valuechain Lecture and Awards, the 5th edition in the series, Wabote stressed that enactment of the law had revolutionised the domestication of local content in-country.

He spoke on the theme: “The Impact of Nigerian Content Law: Taking a Cue from the Successes in the Nigerian Oil and Gas Industry.”Wabote reiterated that the situation in the Nigerian oil and gas industry before the enactment of the NOGICD Act 2010 was appalling, explaining that over 90 per cent of the estimated $20 billion spent yearly in the industry moved out of Nigeria.

According to him, the situation was so bad that a large chunk of the contracts was executed outside Nigeria by foreign companies while only few indigenous services companies could participate in oil and gas tendering process in the industry due to inadequate capacity.

“The situation was worsened by the fact that government seemed to be more interested in royalties and taxes. Consequently, Nigeria suffered an estimated loss of over $380 billion to capital flight, two million jobs within a 50-year period and lost the opportunity cost for in-country capacity development and value addition,” he stated.

The executive secretary pointed out that the cumulative Nigerian content level before the creation of the board was less than five per cent.The sudden realisation of the huge losses, he said, propelled the federal government to put in place a local content policy for the oil and gas industry as part of industrial development strategy for national economic growth and development.

With the existence of the board, Wabote, who was represented by the Head Directorate of Legal Services, Naboth Onyesoh, stressed that there are now visible footprints in the production records of indigenous operators.He explained that these include in-country capital retention, development of infrastructure, vendor development and supply chain efficiency, engineering and technical services as well as fabrication capability.

Others, he added included human capacity development, job creation, asset ownership, procurements, manufacturing of critical oil and gas tools and components, and a paradigm shift in project execution philosophy of operating and service companies in Nigeria.

“On production, the Act has re-energised the participation of indigenous operators such as Seplat, Aiteo, Eroton, and others to move from small producers to the point where they now account for 15 per cent of oil production and 60 per cent of domestic gas supply in Nigeria.“On capital retention, out of the estimated annual industry spend of $20 billion, the picture has changed completely. Under the Act, about $8 billion of the annual spend is now retained in-country.

“On infrastructure, the footprint is visible and remarkably compelling. Implementation of the Act has spurred the establishment of several important oil and gas plants and facilities, including two world-class pipe mills and five modern pipe coating plants.“These facilities have helped to reduce our import dependency on foreign pipes, or coated pipes in the industry,” he added.

On job creation, he disclosed that over 50,000 direct jobs had been created on the back of implementation of the Act, saying that the board has recorded over 10 million training man-hours in human capacity development programmes.

Other dignitaries at the panel discussion moderated by Mrs. Omotayo Omotosho were:  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 Director General, National Information Technology Development Agency (NITDA) Mr. Kashifu Inuwa Abdullahi.

A communiqué released after the event, recommended that it would be more efficient 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.It urged the National Assembly to consider a sector by sector local content law approach, since 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,” it stated.

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