A win-win situation
By retaining crucial resources, building capacity, and developing skills and efficiency in the country, Nigeria is ensuring that it becomes the hub for oil and gas fabrication, engineering, design, repairs, and maintenance work for the Gulf of Guinea.
This first wave of successful local investment and ownership of critical infrastructure will attract a new cadre of high quality, long-term foreign companies and investors, who recognize that Nigeria is fulfilling its potential.
The enhanced infrastructure and state-of-the-art facilities which the Local Content Act has empowered the Nigerian private sector to create is an advantage to multinationals in the oil and gas and offshore industries looking to operate in West Africa. The pressure is on to develop enough highly skilled indigenous workers to enable these companies to set up easily and to operate without compromising efficiency and cost while relying on local facilities and infrastructure.
The sustainability and rapid growth also depends on the effective alignment of private Nigerian, private international, and government interests, which are now aligning in this sector for the first time.
Another example of the Nigerian government's commitment to achieving such alignment is its support of Free Zones, which are under the management of a new managing director, Gbenga Kuye, previously a banker, who has a government mandate to overhaul Free Zones and to make them havens for attracting foreign investment.
Securing local and international private investment also requires that the local facilities and infrastructure are run in partnership with international technical partners. The highest profile partnership is LADOL with Samsung, and several others are in the pipeline.
Nigeria is already seeing the benefits of this new cross-border alignment of public and private sector interests, with Shell recently saying that Nigeria could soon be its highest spend area in the world, with potential investments of $40 billion.
A bright offshore future
The Local Content Act comes with challenges, as does every significant change in governance and business practices. Having sufficient domestic human resources to staff the nascent oil and gas industry requires the training and up skilling of tens of thousands of workers in the country. This will cost both time and money in the short term, and some people will question whether this is a benefit when work can be outsourced relatively easily.
The real benefit of this domestic investment and development model will come in the medium to long term – both for Nigeria's oil and gas industry and the multinational companies looking to operating in it – when human and industrial capacity is in place in Nigeria, and when the return on investment for all stakeholders increases by several multiples. The long-term economic impact will be felt across all sectors of the local economy, improving the quality of life for locals and foreigners in Nigeria and West Africa. Soon, there are expected to be an increasing number of successful domestic companies operating across the region.
A stable and wealthy Nigeria will also be a boon to the global economy, with the evident commercial benefits of the more than 100 million consumers in Nigeria alone, as well as the likely positive impact that will flow to Nigeria's neighboring countries which take their cue from and are heavily influenced by Nigeria.
Nigeria has always had huge potential and largely untapped wealth. With the local private sector now empowered by the government to deploy that wealth, it is clear that the benefits will flow not only to Nigerians but also to the entire West African region and the world.