-By Teddy Nwanunobi
The local content initiative is capable of lifting several millions of Africans out of extreme poverty, boost the incomes of several other millions who live on less than $5.50 a day, increase Africa’s exports, especially in the manufacturing sector, and boost Africa’s income by billions of dollars by 2035.
These were some of the revelations of the maiden African Local Content Round-table in Yenagoa, Bayelsa State, recently. During the event, which was staged at the Nigerian Content Development and Monitoring Board (NCDMB) Towers, stakeholders unanimously agreed that funding is critical to driving local content.
The two-day event (from June 3 to June 4), which beamed its lights on catalysing research and development (R&D), as well as drive the continent’s local content initiative, had its theme as ‘Common Commitment to Fostering Local Content in Africa’.
It was organised by the duo of NCDMB and the African Petroleum Producers’ Organisation (APPO).
The Round-table aimed to:
n Create platform for African peer review on local content development in the hydrocarbon sector;
n Evaluate regulatory models for the governance, funding and monitoring of local content implementation in frontline economies;
n Lay a solid foundation for the design of an African local content programme to maximise economic benefits from implementation of African Continental Free Trade Agreement in hydrocarbon value chain; and
n Data sharing on capacities that exist in skills, infrastructure, facilities, assets and funding for exploration, field development and production activities in Africa.
Determined to take full advantage of emerging opportunities in local content administration, the key stakeholders and policy leaders in Africa’s oil and gas, and other related sectors who met, unanimously advocated for a new local content strategy for Africa with a focus on adequate regulatory framework, funding, human capacity development and strategic research and development (R&D) with effective gaps analysis to positively drive the local content narrative as an imperative for domestication and sustainable growth of Africa’s hydrocarbon resources.
The stakeholders jointly agreed that funding is critical to driving local content, especially with the negative impact of the Coronavirus (COVID-19) Pandemic, which has had very negative consequences on the economy of most Africa countries.
Speaking at the event, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said that Africa must come up with policies that will further deepen the conversations on local content administration.
He added that the success story of the NCDMB as the champion of local content practice in Africa has led to the extension of local content services to other sectors in Nigeria and Africa at large.
Sylva, who regretted that decades of exploration of hydrocarbon in Nigeria have not translated into sustainable growth, stressed that the African Local Content Round-table will henceforth be a “signatory event”.
He said Nigeria must also look to explore its 303 billion cubic feet of gas reserves.
The Executive Secretary of the NCDMB, Engr. Simbi Kesiye Wabote, while setting the context at the Pan-African engagement, spoke on the need for a strong regulatory framework as part of the efforts by the Federal Government to make the local content a core part of the country’s national energy policy framework.
“Funding and incentives are critical to implementing “local content programmes, develop infrastructure, attract new investments, and keep existing businesses afloat,” he said.
He added that the Nigerian Content Development Fund (NCDF) has earmarked a $350 million intervention fund in partnership with the Bank of Industry (BOI).
The Executive Secretary also stated that the research and development “initiatives require dedicated source of funding”.
He added that the research and development “will provide a good platform for the academia, researchers, product developers, and inventors to showcase their break-through for development and commercialisation.”
Wabote recalled that the Nigerian Oil and Gas Industry Content (NOGICD Act) 2010 as established makes the NCDMB the sole regulator of oil and gas in Nigeria.
He maintained that the Board promotes local content, ensuring that the construction of its 17-story Towers in Yenagoa was done by indigenous engineers.
“A sustainable local content practice requires that the right regulatory framework is put in place, regular gap analysis and the setting of targets for gap closure. The right resources including funding and incentives are required to build capacities and capabilities. R&D is the key drivers to bring innovation and avoid obsolescence,” he said.
Lending his voice to the local content narrative, the Secretary-General of African Petroleum Producers Organisation (APPO), Dr. Omar Farouk Ibrahim, stressed the need to put resources together before it is late to harness Africa’s oil products.
He added that the time has come for countries in Africa to “close its eyes to the challenges of boundaries.”
Dr. Ibrahim regretted that governments of APPO member countries are heavily dependent on oil and gas revenues to meet the demands of their citizens. The implication, He said, is that in the next few years, the advancement of new technologies and financing would be halted, as the focus will shift to renewable energy options.
He further stated that as a result of the Paris Climate Change Agreement and the COVID-19 pandemic, the organisation is now committed to ensuring that hydrocarbon emissions are curtailed, as well as the continents’ over-dependence on oil, stressing that it has become paramount for every nation to have its refinery and gas plants.
“We need to understand the dangers posed by the so-called energy transition. We have 600 million people who do not have access to modern energy. We cannot continue to deny them this privilege. APPO is going to work with OPEC and other oil agencies between now and November,” he said, while expressing his concern about the emerging realities.
Similarly, the APPO Executive Board Member representing Algeria, Madam Massout Samia, expressed the view that Africa must introduce facilitation and document activities to augment resources related to local content. She stated that aside from the regulation of hydrocarbon and the revenues that come in from oil, benefits from technological advancement must also be pursued.
She said Africa must further develop the quality of its local content capacity to meet required standards, adding that hydrocarbon should be considered as the engine and backbone of the continent.
In the same vein, the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Nicholas Odinuwe, called on African governments to develop mechanisms for independent start-ups, pointing out that policies alone are not enough to drive local content in Africa.
Odinuwe, who maintained that the legislation remains essential, highlighted that the capacity of PETAN and other stakeholders has grown since the passing of the NOGICD Act in 2010.
Revealing that PETAN now has over 200 members across the sector, he acknowledged that the breakthrough is traceable to the NCDMB’s engagement with local capacity.
He advised that the African Continental Free Trade Area (AfCFTA) must also create regional relationships for hydrocarbon trade with a private sector-driven initiative.
While stating that PETAN will partner with the NCDMB to expand this initiative to other stakeholders and regional markets, he lamented the situation where Africa exports its crude and imports the finished products, saying it cannot guarantee the needed progress.
In the same vein, the Commissioner of Energy and Mines (ECOWAS), Mr. Sediko Douka, listed some of the challenges impeding the local content initiative as the absence of well-established institutions, lowly motivated staff, lack of private sector participation, low level of value addition, licensing, and climate change.
The ECOWAS representative emphasised on the need to improve on regional cooperation and development of the extractive industry with a call for improved infrastructure to promote an investment-friendly climate and the establishment of institutions to drive the local content narrative in Africa.
He also prescribed the promotion of the advancement of human capabilities through training and enhancement as a panacea for integrated guidelines for social corporate responsibility. He further stressed the need to have local content as the backbone for development in Africa, and urged member countries to ensure that its oil facilities are open to member countries.
The Executive Secretary, National Action Committee on AfCFTA, Mr. Francis Anatogu, observed that for any product to be considered as local content, it must meet a minimum local content standard.
“We must do local content to protect our currency and grow it. Africa records over $500billion of products per annum,” he noted.
According to the AfCFTA Executive Secretary, the local content initiative is capable of lifting 30 million Africans out of extreme poverty, boost the incomes of nearly 68 million others who live on less than $5.50 a day, increase Africa’s exports by $560 billion, mostly in manufacturing, and boost Africa’s income by $450 billion by 2035 (a gain of 7 per cent).