NCDMB Mentors African Oil And Gas Operators To Achieve Regional Collaboration
As Nigeria’s success story on local content law implementation echoes around the globe, many African oil-producing countries have found the initiative a worthy model to follow. This has seen the Nigerian Content Development and Monitoring Board (NCDMB) playing a ‘big brother role’ in mentoring other African countries on their local content development process.
In this interview with Peace Obi, the General Manager, Research, Statistics and Development, NCDMB, Abdulmalik Halilu X-rays efforts made so far to achieve regional collaboration as well the progress the Board is making on Project 100 among others. Excerpts
While Nigeria’s success story on local content law implementation echoes around the globe, the influence of NCDMB is also spreading across Africa where the Board has been playing mentorship role to some countries like Ghana, Uganda, Senegal in the development of their local content laws, what does that mean to Nigeria?
It means that Nigeria has something to offer in terms of knowledge, in terms of leading practise. It also means that we are very transparent as a country by allowing other countries based on a peer review mechanism to share our experience with them. We are very open and happy to bring our brothers in Africa up to speed in terms of what we have achieved.
Those engagements also enable us to validate our processes because when somebody tells you, “this thing you have put in place, I am going to model it.” It means that you are on track. That is the kind of insights and excitement that this kind of interventions brings about. Remember when Ghana wanted to develop their own local content law, they also came to Nigeria. We provided them with insights and then you can see the law in Ghana mirrors the NOGICD Act. That is the kind of African brotherliness we are bringing to local content.
For Nigeria, are these engagements deliberately geared towards strengthening the much talked about regional collaboration, especially among African oil-producing countries?
Of course, in these conversations, we keep highlighting the importance of regional synergy. The last time we had an engagement with Ghana, we reiterated the fact that we have a Floating Production Storage and Offloading (FPSO) integration yard in Nigeria and because FPSO is not something we continue to build, countries that want to go into field development should take note of the capacities that exist in Nigeria. And I believe that when that message is resonating across Africa, most African countries will find out that there is actually no need for them to replicate having an integration yard; they will leverage what we have in Lagos and you can imagine the traffic that will be coming from other African countries.
So, that is the essence of those engagements and we are happy to continuously share our experience, to advertise opportunities and capacities that have been built in Nigeria. It is also to validate our own models for us to take new insights because no matter how emerging a country is, they must have something valuable to add. So, those contributions that they make are also part of the insights.
Beyond sharing our experiences with African countries, we also go to countries that are even more advanced than us. A benchmark study is an integral part of our policy formulation framework. So, we go to countries like Brazil and look at how they are developing a particular sector in Brazil and see if we can adapt it to our situation.
Does this lead Africa into regional content development where Nigerian with an abundance of skills and capabilities are able to transfer skills to countries in the region without feeling like expatriates?
I happen to be the NCDMB nominee on the ECOWAS policy on hydrocarbon and also the African Petroleum Producers’ Organization (APPO) policy on local content. What you have just said now speaks to the kind of policy framework that we are thinking about. Under the ECOWAS arrangements, we have identified that markets shouldn’t be defined based on country. It should be defined based on regions. We also believe that the cross border movement of skills should be encouraged. We also said that, under the APPO policy, we said that African countries should be treated as a continental market.
The advantage of those kinds of things is that the demand for materials within Nigeria might be like 60 per cent but when you add that to the demand from other African countries, you will get a larger tie. So, if investors will see Africa as the market and not just a Nigerian market, they will rather invest here because Africa as a region has this volume of demands.
For example some years back some companies wanted to invest in umbilicals but did not because they said the demand for umbilicals in Nigeria was not encouraging enough for them to set up here. But If we had thought about this, then, we would have taken them through the African demand. It is not really a bad case because we later discovered that Angola has an umbilical facility which is still fine. So, we should leverage capacities that exist in other countries.
Is regional collaboration truly achievable?
Why I think it is achievable because it is taken at the policy level. It’s not a company to company discussion. At the policy level, like the ECOWAS policy on hydrocarbon, I think we are at the stage where it’s going to be presented to the ministerial council before the council of Heads of State. Now, once it is adopted as ECOWAS policy, countries will key into it. It takes time! I think we gave ourselves a target of 2021 or so. It will happen! APPO policy for local content speaks to all the petroleum-producing countries in Africa. So, you can imagine if they adopt that under the APPO Council of Ministers, then countries will adopt it because it is implementable. The benefits far outweigh the limitations. The limitations are where small countries feel not fully covered but the economy of scale can never go wrong any day, anytime.
What were some of the things NCDMB looked out for during the selection process for the first of Project 100 Companies?
We looked out for their compliance with the provisions of the NOGICD Act, their compliance with the regulatory requirements, their business offerings, among others. Questions were also asked around their priority in terms of developmental aspirations as well as where they want to be in the next five years. We screened the companies and came up with 60 companies that met our criteria.
The outcome of that exercise gave us some insights into where to focus on in terms of intervention. It is important to note that countries that want to grow their local supply chain take deliberate efforts to identify companies that are already on their feet, they will come up with specific interventions that will take them to the next level.
What is the NCDMB doing to ensure that the various needs of these companies are met?
What we have done now is to compartmentalise the interventions into financial and non-financial interventions. The financial intervention is where you facilitate access to capital at a single-digit interest, while the non-financial is where you look at the business needs. There are situations where some companies will identify certain government policies they think are inimical to their growth. So, we will look at those policies by working with the Ministry of Petroleum Resources to drive policy recommendations so that we can begin to bring the desired changes.
There are also, companies that identified capacity building as their own problem. In fact, we have discovered that not many companies invest in staff in terms of training. And training is very, very important. Most of the companies have that deficiency while some don’t have the state of the art technology that will enable them to compete in the industry. Yet, for some, it is about the process, while there is also the business insight angle – where you don’t even know where the opportunities are so that you can begin to shape your investments in capacity around those opportunities.
So, we needed to also, create that platform where people begin to see a five-year horizon in terms of the opportunities. Another one is the need for access to markets. We needed to create a framework where NCDMB, NNPC and the operators will work together to come up with a framework that will facilitate access to markets for companies that have prospects of doing well in terms of quality and pricing.
So, these are the interventions we have put together under Project 100. We have about 60 companies enlisted so far. We are also going to roll out the bespoke interventions sometime in August because we just completed the rapid diagnostic survey of the companies. We went round all the 60 companies to revalidate their needs and also to cross-check their profile and their offerings. So, we are putting together the reports and thereafter, we roll out bespoke interventions. We have a monitoring and evaluation system to track their progress. Progress will be measured in terms of volumes of transactions they’re able to generate as a result of the interventions that we’re going to put in place.
So, we expect the companies to grow from the current level of turn over to a higher level. Our aspiration is for them to go beyond N500million which is the definition of large enterprises in Nigeria. Our aspiration is to see that they create more employments for our youths; have the latest technology that is required by the industry and proper documentation system. We also realise that documentation was an issue and we need them to present themselves very well.
The fact is that we are projecting these companies to the global space, exposing them to international companies. So, these companies need to document their profile in a manner that it makes easier for any international player that wants to form an alliance with them to carry out some business will do so comfortably because you’re presentable and that your profile speaks about who you are.
All that is part of what we’re going to do under project 100 and the communication will be very continuous in terms of what we have achieved and companies that have grown. Hopefully, in December, we’re to open up the platform again so that companies that are interested will still apply and then by January we launch the additional 40 companies. The whole idea is to have Nigerian companies that can compete any day, anytime with international companies. The whole idea is to develop our own large enterprises in Nigeria through the instrumentality of Project 100.
How soon is the local content policy going to be extended to other sectors like manufacturing as well as the amendment?
I know that the 8th Assembly tried it but by the procedures of National Assembly, I think they have to start all over again. But the government is pushing the agenda even Executive Order Five tried to create a separate local content law but we were quick to intervene to say it is better to leverage the NOGICD Act and expand it. I think that is being considered because recently, I was in a programme organised by the Ministry of Science and Technology, it was re-echoed as part of the communiqué. So, I think it is a function of how the Legislative and the Executive are able to deal with the situation. I won’t be able to say this is the time but we are hopeful because it keeps reoccurring and people have been talking about it. It is going to be sooner than later. The amendment of the NOGICD Act is also part of it.