Local Content Administration in Nigeria – Marcus Enyioko

Multinational companies commenced oil prospecting in 1956 in the Niger Delta area of Nigeria. 1958, two years later exportation of crude oil in commercial quantity began in earnest. Today the country is a formidable player in the world oil market, with a share quota allocation of 2.4million barrels per day.

Since 1958 till date, the country has earned in excess of $500billion United States dollars into US coffers. Yet the question remains what are the socio-economic benefits for Nigerians? Yakubu Gowon’s administration in 1973 made pronouncements about massive revenue returns accruing to the country during the oil boom era. The problem was not the money, but how to spend it.

“The aftermath of the boom was the monumental provision of infrastructure and adverse marginalization, neglect of oil-producing regions in Nigeria. In other to balance the trend in stake syndrome, the government in 2009, promulgated the local content act, giving Nigerians a 10% stake in the oil and gas operations. This act re-emphasizes the need for Nigerians to embark on minor processes meant to augment the effective flow of these organizations.

Mainstream oil and gas companies like Shell, Mobil, AGIP, ELF, etc took the task of prospecting and drilling, while 10% local content reserved for Nigerians were obliged to supply working tools and carry out periodical maintenance on oil installations. Today, the stakeholders’ syndrome exposed the government to wealth inherent from mere 10% stake allocations. The content law brought onboard a wave of unprecedented economic activities, jobs were created on terms of contracts and oil servicing outfits came into being to render preliminary links that were basically needed by companies operating within the oil zones.

The government’s intentions initially were to create a sense of belonging and inclusion for the marginalized people of the region. But the original objective of the policy has been hijacked by political insinuations designed to favor some groups at the expense of mainstream low-income groups sidelined as underdogs who constitute the underpaid workforce.

Contractors in the oil servicing firms are government cronies, who enjoy excessive margin regarding remuneration paid directly to them in their names by oil companies. Meanwhile, contractors undermine the economic and social rights of workers by making almost 60% deductions of wages and remnants paid as peanuts after a series of tax deductions.

With the unemployment saga raging across the nation fixed at the moment at 30%, local content administration should be used to create jobs, mitigating the excessive lay off by companies alleging economic downturn. However, government policy should continue to encourage economic stability in the oil and gas sector, with the view to absorb a considerable chunk of jobless Nigerians.