WEST AFRICA
Local content rules in Nigeria
expected to transform West Africa
Impact of new regulation should drive investments and employment
In 2010, the Nigerian Oil and Gas Indus- try Content Act, or the Local Content Act as it is commonly called, became law. The act had been 10 years in the mak- ing and prescribes minimum thresholds
for the use of local services and materials
with the overarching objectives of ensuring
on-going job creation and improving skills
of the local labor force as well as participation and ownership for local Nigerians in the
country’s developing oil and gas industry.
In this way it will ensure investment and
growth in an industry crucial to Nigeria’s
ongoing economic growth.
Since the act came into force its impact
has been striking. The Nigerian Content
Development and Monitoring Board (
NCDMB) reports that from 2009 to the end of
2013 the act’s implementation generated $5
billion of investments for the Nigerian econ-
omy, and led to the creation of 38,000 jobs in
the country’s oil and gas industry. The board
indicates that billions of dollars which oth-
erwise would have been invested in foreign
markets is being invested in Nigeria. This is
generating signifcant new revenue for the
economy and offers the chance for the Ni-
gerian market to expand and develop. It also
has an impact on Nigeria’s GDP growth, and
if this continues, Nigeria looks set to follow
Brazil’s pattern of economic success and will
join the G20 within the next two decades.
A new model
The current situation is a marked contrast
to the operating environment during the frst
50 years of Nigerian oil exploration and production, and represents a new and sustainable model for economic development. The
excitement around and the sustainability of
Nigeria’s current economic development and
growth is rooted in the fact that this movement is being initiated, driven, and maintained by indigenous private sector investments.
This is the frst time in Nigeria’s history
that its own people have had this level of
control and involvement in this key area of
the economy. Even those who were previ-
ously critical and skeptical about Nigeria in
general are cautiously optimistic about the
potential for Nigerian indigenous private
sector driven local job and wealth creation.
The potential benefts to the country are
enormous as this could also be a real driver
not just of widespread economic growth, but
equally for the development of civil and po-
litical stability.
The act has generated a sense of owner-
ship of and pride in the oil and gas industry,
as is obvious with the boom in the number of
domestic investors and operators.
Engineering in Nigeria’s oil and gas indus-
try is now done 90% in-country, fgures from
the NCDMB show. And with an increasing
number of facilities and assets owned by in-
digenous operators, the legacy of the Local
Content Act should endure as local capacity
and resources such as new fabrication and in-
tegration yards, pipe mills, technical colleges,
and steel mills, are developed and used.
The largest local content capacity devel-
opment since the act passed is the building
of Africa’s largest onshore vessel integration
and fabrication yard, at a cost of $300 million.
It is funded by LADOL, the only 100% Nige-
rian logistics base developer and operator.
LADOL is building the yard in partnership
with Samsung Heavy Industries, which will
run the facility and use it for the integration
of Total Upstream Nigeria’s Egina FPSO.
The development of this facility is a land-
mark achievement Nigeria has been trying
to reach for almost a decade. Such facilities
are strategic in that they create a multiplier
effect on jobs and also trigger a signifcant
increase in demand for direct and indirect
services and resources – all of which will
be developed and provided in Nigeria for
the frst time. Thus an estimated 50,000
direct and indirect jobs will be generated
for Nigerians and billions in investment is
expected across the country, thanks to this
one facility. Private-sector investors are fast-
tracking new fabrication yards, steel plants,
and engineering schools across the country
to ensure that in-country capacity can meet
the new local demand created, and can do-
mesticate the lion’s share of the estimated
$70 billion projected to be spent in Nigeria
Dr. Amy Jadesimi
LADOL
Nigeria’s local content drive is expected to generate a boom in facilities construction and employment. (Photo courtesy LADOL)
