The Manufacturers Association of Nigeria (MAN) and other key players in the oil and gas as well as manufacturing industries have raised concerns about the implementation of some sections of the country’s local content, especially the human capital development fund even as they warned that excess levies may cripple the sector.
Coming amid an exodus of companies from both the oil and gas sector and the manufacturing industry, the key players are asking for a new local content law that would be strategically designed for the sector.
But the stakeholders, at the Practical Nigerian Content Forum in Yenagoa, Bayelsa state, said due diligence that would include proper regulation, incentives, enforcement and standardisation is highly needed if the plan would work.
Speaking at the conference, the Chairman of the Independent Petroleum Producers Group (IPPG), Abudulrazaq Isa, said the requirement that industry participants set aside three per cent of project cost (projects above $1 million) to conduct local content training should be reversed.
“While this is undoubtedly a laudable initiative, we must consider that it amounts to a multiplication of levies as industry participants are already equally required to contribute a separate one per cent of total costs as Content Development levy.
“This invariably leads to higher project costs, especially as the training is not allowed to be provided directly to company staff and service providers. Due to this and other contractual or administrative reasons, the process of complying with local content requirements has, on many occasions, proven to significantly increase the overall cost of delivering projects in Nigeria,” he stated.
At a time when the government is looking for more investment, he said, the development could deter investors, adding that the local content policies must be constantly evaluated to ensure that they are continually fit for purpose and not counter-productive to the country’s long-term industry growth.
He said the industry faces pressure to remain profitable and cost-efficient as it grapples with competition from other investment destinations.