Jonathan advises Mozambique, other African nations on local content policy

Former President 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 to be 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.”

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