December 17, (THEWILL) – The Local Content Policy, administered by the Nigerian Content Development and Management Board (NCDMB), was significantly instrumental to the boost in Exports recorded in the nation’s Merchandise Trade for the third quarter of this year (Q3 2023), according to data by the National Bureau of Statistics (NBS).
The NBS in its latest ‘Foreign Trade in Goods Statistics (Q3 2023)’ report, disclosed that Nigeria recorded a remarkable increase in Exports during the period compared to the corresponding and preceding periods.
“Nigeria’s total merchandise trade in the Q3, 2023 rose significantly due to increase in exports and imports resulting in a positive trade balance.
“Nigeria’s total trade in the third quarter of 2023 stood at N18,804.29 billion. Exports were valued at N10,346.60 billion while total imports stood at N8,457.68 billion,” NBS said.
The report showed that “Total exports increased by 60.78 percent compared to the amount recorded in the second quarter of 2023 (N6,435.13 billion) as well as by 74.36 percent compared to the corresponding quarter in 2022 (N5,934.15 billion).”
It disclosed that the export boost came majorly from re-export activities in the oil and gas sector which was dominated by Nigerians who played in the Local Content Policy space, according to findings by THEWILL.
Re-exports are exports of foreign goods in the same state as previously imported after serving the purpose they were initially imported or for other reasons. It entails sending back goods imported for specific purposes like jobbing, executing a contract, servicing/repairing of machinery, display in fair/exhibition, and others.
Re-exports can be made by sea, air, baggage or post. The specialised activities in the oil and gas industry create the room for re-export which involves mainly services: recoupling, repackaging, handling, shipping, tax administration, insurance, community liaison and other activities.
THEWILL found that many Nigerians, especially in the small and medium enterprises (SME) ecosystem, are engaged in re-exports which are fallouts from the activities of major oil and gas companies who outsource the jobs to local contractors.
The expertise acquired by the Nigerian operators in Engineering, Procurement, Installation, Operation and Maintenance (EPICOM) space equips them to undertake technical jobs like installation and servicing of metering system, construction of loading bay, LPG installation, tank farm construction, installation of actuators, colons, mechanical seals, valves, steam trap and other process equipment which served as conduit for forex drainage before the Local Content Policy was initiated.
The NBS report revealed that the value of re-export stood at N35.95 billion representing 0.35 per cent of total exports in Q3, 2023.
The top ranked re-exported goods include ‘Parts suitable for use solely or combined with others’ at N10.19 billion, followed by ‘Vessels and other floating structures for breaking up’ valued at N10.04 billion.
‘Lightvessels, fire floats, floating cranes, and other vessels not specified in 8905 (a Customs Code)’ amounting to N5.77 billion, Aluminium waste and scrap valued at N1.50 billion were handled.
Also undertaken in the re-export activities include ‘Parts of other gas turbines not specified’ valued at N1.12 billion. These were done largely by the Nigerian industry operators under the Local Content Policy.
Ivory Coast, Gabon, Ghana, Cameroon, and South Korea were the major destinations for re-exports during the period.
“We have expanded our business significantly; we now do virtually everything locally without the help of expatriates,” a Port Harcourt-based oil and gas service operator who would not want his name published “because of these tax people”, told THEWILL. He applauded the NCDMB’s role in its monitoring of the industry.
Industry operators who spoke to THEWILL maintain that the success of the Local Content Policy hinges on capacity building, especially in the aspect of human capital development. They argue that oil and gas is technology-driven and is transforming rapidly to another level where less emphasis is on fossil fuel.
Edwin Amali, an Engineer running an oil and gas business in the Niger Delta area said NCDMB should develop a plan for the absorption of young engineering and related graduates and attaching them to field operators. “What matters is human capital. The local content initiative goes beyond riding big cars, building mansions. Otherwise change will overtake us,” Amali said.
The Supervisor, Media and Publicity at NCDMB, Obinna Ezeobi, had said the Board was serious about capacity, referring to the research centres of excellence established in some Nigerian universities by the Board
The objective of the Local Content Act enacted in April 2012 is to promote the use of local materials and services for the development of the Oil and Gas Industry. This is yielding the desired results.
At the 12th Practical Nigerian Content (PNC) Forum 2023 in Yenagoa, recently, the immediate past Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, announced that the agency had completed 83 percent of the 96 initiatives it started under the Nigerian Content 10-year Strategic Roadmap.
The strategic roadmap was launched at the end of the year 2017, with the goal of increasing Nigerian Content in the oil and gas industry to 70 percent by the year 2027. The roadmap is undergirded by five pillars and four enablers to drive the focus areas and are supported with short, medium, and long-term initiatives.
Presenting the scorecard of the NCDMB at the PNC which was attended by over 700 oil and gas stakeholders, Wabote indicated that the Board’s focus would shift to the remaining initiatives, which according to him required some heavy lifting to bring them to fruition.
He reported that Nigerian Content level in 2023 stood at 54 per cent, just like in 2022. The calculation is based on the Board’s monitoring and evaluation of industry activities.
According to him, “this performance is well above the minimum target of 47 percent Nigerian Content set for 2023 by the Board’s Project Management Office (PMO) just like we outperformed the 42 percent Nigerian Content target set for 2022 by achieving 54 percent Nigerian Content.”
He indicated that the top three performers of in-country spend are Shipping, Surveying/ Positioning services, and Inspection/ Testing and Certification with each at 100 percent NC level, while the bottom three performers are Modification and Maintenance at 26 percent NC level; Health, Safety and Environment at 31 percent NC level; and Materials and Procurement at 32 percent NC level.
He expressed concern that the stagnation of the Nigerian Content achievement at 54 percent raised questions on whether we had reached a point of stagnation or an inflection, leading to the decline in Nigerian Content level in the oil and gas industry.
The NCDMB boss, who was making his last PNC keynote address as the Executive Secretary of NCDMB reminded the top government functionaries and industry stakeholders that “getting the industry to this level of Nigerian Content is not a walk in the park,” and called on all stakeholders to “play their part to prevent the industry from rolling back to the dark days of implementing Nigerian Content as a token of consolation.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
