Former President, Dr. Goodluck Jonathan, has advised African countries, especially Mozambique, to be transparent and carry the private sector along in the formulation of their local content laws, as a means of making the policy more effective and beneficial to the people.
Dr. Jonathan who stated this at the 4th edition of the Financial Times Mozambique Economic Summit on Wednesday noted that the policy which is meant to promote local participation in the economy should be designed to encourage the international companies to train and deploy local capacities in their operations.
Speaking directly to Mozambican officials at the summit who sought his advice on how to perfect the nation’s local content law, Jonathan said: “First and foremost the local content law is not designed to frustrate international investors, especially the international oil companies (IOCs). If a law frustrates them, then the host country may also lose because it may not have the requisite capacity. The idea is that the law must encourage them, in this case, to deploy people from Mozambique where the capacity is available and also to encourage them to develop capacity.”
The former President also shared the experience of Nigeria’s power privatisation and gas sector reforms with the audience. He traced the history of power generation in Nigeria to 1896 when a 25 MW plant was built in Lagos. The former President provided a bird’s-eye view of Nigeria’s power sector privatisation, emphasising the need to carefully handle such key issues as cost-reflective tariff, regulation, labour as well as credibility and public support for the reform programme.
He, however, observed that Nigeria was still experiencing challenges with electricity supply, despite the privatization of the sub-sector, but expressed the hope that whatever limitations being experienced now would be overcome with time.
He further advised Mozambique to embrace privatisation now that they enjoy relatively steady power supply and economic growth so that the process would have been perfected in view of future demands for more power which development brings.
Speaking further on the Nigerian Oil and Gas Industry Content Development (NOGICD) Act which came into effect on 29th March 2010, Jonathan stated that the development helped reposition the country for workforce capacity building and sustainable growth.
He noted that before the local content law came on stream, Nigeria already had the cabotage law which made it possible for Nigerian vessels and indigenous firms to participate effectively in the commercial transportation of goods and services within the nation’s coastal and inland waters. This, according to him had a positive impact on the growth of the local economy.
“The local content law even took the issue of local capacity building further. The local content policy helps a nation to grow local capacity and utilisation of resources, especially if a board is set up for that purpose.
“ If the companies here are resisting the policy, it may have to do with the way the law is being crafted. However, don’t forget that people generally fear the introduction of anything new or different from what they are used to. That is why it is important to carry them along so that they will see that your intentions will be mutually beneficial to your country as well as the investors. They must be properly briefed in a way that will make it clear that the local content law is not to punish or short-change them. It should actually form part of their corporate responsibility which requires the activities of the investor to impact positively on the host country and the environment. The local content law only gives a legal backing to that responsibility by ensuring and enforcing compliance. Like I said earlier, if it is designed or implemented like a punitive law, it will discourage investors.
“If well implemented the local content law, will go a long way towards building the capacity of the local workforce and promoting entrepreneurship. The law also makes it possible for locals to handle some levels of contract in the oil and gas industry and also encourages the international companies to collaborate with local partners to be able to win such contracts.
“The idea is that if a country is making big money from its sale of oil and gas, it must strive to improve and positively impact the well-being of the citizens. It goes beyond building roads and other infrastructure. It has to have a direct impact on the capacities and well being of the people. The big corporations mining these resources should also have a considerable presence in their areas of operation in such a way that it will be beneficial to the host communities.
“In the case of Nigeria the local content policy has helped to develop the capacities of the youths in many technical areas like surface and underwater fittings, welding and other areas of operations in the sector. It really allows wealth generated in the oil and gas sector to permeate and impact the general society.”
