9 - Local Content and the Sustainable Development of Oil and Gas Resources in Nigeria

Summary

Nigeria offers a classic example of how lack of effective safeguards on anti-corruption, accountability, and transparency may hinder the sustainable development aims of local content policies. Based on the fundamental premise that petroleum resources, as well as its accruing benefits, belong to the Nigerian people, Nigeria has designed some of the most comprehensive local content laws and requirements (LCRs) in the world. However, in reality, the core precepts of Nigeria’s LCRs have not fully translated to increased economic and social benefits for Nigerian workers and industries, especially those in the oil producing communities.

This chapter evaluates the efficacy of the local content regime in Nigeria. It identifies legal, institutional, and practical challenges that hinder the full attainment of the intended sustainable development objectives of the Nigerian local content regime. These include corruption and lack of transparency in the monitoring of LCRs; unaddressed skills and capacity gaps of intended beneficiaries of LCRs; lack of financing for domestic companies; lack of coherent integration of Nigerian LCRs and national sustainable development plans; as well as gender inequalities in the oil and gas sector. The chapter then discusses a wide array of solutions that can help maximize the sustainable development potential of Nigerian LCRs. These reforms include the need to: implement anti-corruption and whistle blowing initiatives in the Nigerian oil and gas sector; improve the coherent enforcement of relevant laws providing for LCRs and sustainable development plans (SDPs); create specialized training schools for skills acquisition for Nigerians in the oil and gas industry to enhance local content; as well develop a sustainable roadmap for addressing gender gaps in the Nigerian oil and gas industry.