Local content: Indispensable tool for Nigeria’s development

It is nearly impossible for Nigeria to achieve greatness when the majority of goods consumed and used locally are imported. The country’s recent experience with exchange rate volatility is an indication that as long as nothing definite is done to cut appetite for foreign goods, industrial and economic development will remain a mirage. More than 100 firms shut down in Nigeria in 2016 alone because they could not source dollars to import inputs or struggled to carry out transactions that year. The damage done by the situation (which was badly managed) is still with Nigerians.

This makes a case for local content in all the spheres of the economy. Local content here incorporates the use of more local raw materials and domestically fabricated machines, patronage of locally produced goods, and use of domestic labour, among others.

Stakeholders assembled at the August Breakfast Meeting organised by the Nigerian-American Chamber of Commerce (NACC) in Lagos last Wednesday to examine ‘Nigeria’s Local Content Policy and Its Impact on Sustainable Economic Value Creation’.

Speaking at the event, Simbi Kesiye Wabote, executive secretary of the Nigerian Content Development & Monitoring Board, said local content was inevitable for Nigeria as it would engender technology transfer, productivity, use of locally made goods, employment and value chain optimisation, while reducing poverty and capital flight.

Represented by Patrick Obah, director of planning, research and statistics, Wabote said the efforts of the board had led to the establishment of 420 metric tonnes per annum (mtpa) pipe mills, including two world-class mills in Abuja and Lagos.

He cited other achievements to include attainment of 36 percent of marine vessels (locally), six million training man-hours (5,769 trainees), and local processing of barites.

He disclosed that the Nigerian content level was currently 28 percent and the board’s plan was to raise it to 70 percent in 2027.

Oluwatoyin Akomolafe, president of the Nigerian-American Chamber of Commerce, said several studies had shown dramatic increase in the local capacity utilisation attracting over $5 billion into the local economy while also creating employment.

“In the cement sector, for instance, the country has achieved a significant level of backward integration, with over 80 percent of the materials used for cement production in Nigeria sourced locally. Similarly, there have been several policies to promote backward integration in food processing,” Akomolafe said.

Funke Opeke, chief executive of Main One Cable Company, a Lagos-based communications services company, said it was unfortunate that a lot of tech companies could be developed remotely with no value addition or physical presence in Nigeria, thereby precluding locals from gaining jobs and the required skills.

“This means no employment, no taxes, no skills transfer,” Opeke noted.

“All the value is added offshore, and all you get is logistics, which is done at the airports.”

She stressed the need to provide adequate incentives to local firms, adding that large enterprises in the USA and China would not exist today without government incentives.

Ibilola Amao, principal consultant at Lonadek Inc, said Nigeria must begin to invest more in Science, Technology, Engineering and Mathematics (STEM) and play active roles in technology.

She stressed the need to bridge educational institutions and the industry, while clearly defining the type of skills the citizens need to compete globally.

Andy Isichei, president of Nigerian Chamber of Shipping, stated that part of the local content included ensuring that ship owners preferred to use Nigerian ports rather than ports of neighbouring countries.

“But ask yourself, why do ship owners prefer ports outside Nigeria? It is because inefficiency is still a challenge at the Nigerian ports. This is evident in terms of experience of staff of regulators and dilapidated infrastructure. It can take a truck owner two weeks to pick a container at Apapa port. One of the vessels stayed for 19 days in Apapa and was paying $15 each day. Why do we have so many tank farms in Lagos? We need to dredge other ports across the country,” Isichei said.

ODINAKA ANUDU