The Petroleum industry in Nigeria is considered to be the largest with the potential to generate average Gross Domestic Product (GDP) higher than any other country in the West Africa Sub region.
Over the years the oil and gas sector has continuously battled with the problems of infrastructural development, project financing, transparency and the dearth of local content participants in the industry.
But the recently launched 200 million dollars Nigerian Content Intervention Fund (NCIF) is expected to grow local capacity and increase so as to increase their participation in the Oil and Gas industry
Before this time the huge financial investment made by the government in the oil and gas industry had not resulted into significant benefits for most Nigerians as local content in the industry in Nigeria was very low, being that over 60 per cent of the industry was managed by multi-nationals.
The inauguration of Engineer Simbi Wabote, as the Executive Secretary of the Nigerian Content Development and Management Board (NCDMB), by the Buhari administration seem to have changed the narrative of poor performance of local participants in the industry.
The intervention fund which was established as an enabler in 2017 has a single digit interest rate of 8% for loans to Nigerian oil and gas service providers and single interest of 5% extended for loans to community contractors.
Engineer Wabote in a recent interview explained that the release of the fund is one of several strategic initiatives of the Board in its bid to deepen local content participation in the oil and gas industry.
The Nigeria Oil & Gas Industry Content (NOGIC) Act was enacted in 2010 and within the seven years period it has been in operation, the oil and gas sector has made tremendous gains in terms of what it has been able to draw back and domicile in the country.
The Executive Secretary said that aspiration of the Board in terms of its 10 years strategic plan, is to have up to 14 billion dollars out of the about 20 billion dollars domiciled in the country annually.
The critical success factor of the Board, the Executive Secretary pointed out has been the implementation of the Act itself. “The Act has been very critical to the success we have achieved. Prior to now we practiced what we call poles in terms of local content implementation”
Engineer Wabote further disclosed that one of the major impediments for most Nigerians in the Oil and Gas sector was the cost of financing projects which was put at between 15% and 26%.
But working in partnership with other stakeholders he said, the Board came up with the types of facilities that involves a large range of funding up to 10 million US dollars with a single digit interest rates as earlier stated. “But aside from that we also have a facility for contract financing for those that have short term contracts to access up to $15 million at the rate of 8%."
Explaining further, Engr. Wabote said for community contractors, they can access up to $20 million with an encouraging interest rate of 5% that can span up to five years.
“This time you will be able to get a loan because you access it through personal guarantors of the promoter or with people that work in Government Ministries from grade level 12 and above or people that work in the bank”
The Executive Secretary of the Board however, pointed out that the facility is not a grant or a national cake to share, but strictly for the purpose of business. “For anybody to access the fund, which is been managed by the Bank of Industry, such beneficiary must be a contributor to the fund. The fund is contributed by contractors that execute business in the oil and gas sector” he said.
According to him those applying for the loan must go directly to the Bank of Industry as they have also opened a web portal were people can apply.
Being a pilot scheme, the NCDMB Boss believes it can only get better as partnerships can also be formed with other financial institutions to expand the size of the fund. But he said “the idea was to start with a development bank that have managed such scheme in the past because if you look at their history, you'll find experience as there is intervention fund for small and medium scale enterprises and now for the oil and gas sector.”
“People think there is so much funds in the oil and gas sector so why the need to finance them but the Nigerian businesses are struggling to take advantage of the local content act because of finance, so this fund is meant to bridge that gap and support genuine Nigerian
Businesses that are within the oil and gas sector so we advice them to go further and access this single digit loan.”
With the success that has been achieved in the oil and gas sector, the Board is already engaging in discussions that would result in expanding the current law to cover the Power and the ICT sectors because these are sectors that create huge employment in while also being dominated heavily by foreign concerns.
According to him the Nigerian Content Consultative Forum is currently deliberating on how to expand the NOGIC act which has the manufacturing, fabrication and engineering sectors, as well as insurance and banking.