The signing of the Nigerian Local Content Act into law by the Goodluck Jonathan administration in 2010 was greeted with much applause.
Although this was limited to the oil and gas industry, the law saw an increased local participation in the oil and gas industry as well as enhanced knowledge transfer in the industry. Ten years after, and in view of the lessons that the COVID-19 pandemic has taught us as a people, it is high time we started to think and look inwards. While we cannot boast of self-sufficiency or even isolate the country from trading with other countries, we cannot in the same vein shy away from the need for us to promote our drive towards self-sufficiency. This has become very necessary if we must redress the persistent trade imbalance the country battles with.
Nigeria is not the only country that has initiated a Local Content Act. In neighbouring Ghana, there is also the Ghanaian Local Content Act. In the case of Ghana, their local content law aims at promoting the maximization of value addition and job creation through the use of local expertise, goods and services, business and financing in the petroleum sector. Other African countries such as Ethiopia, Tanzania, and Rwanda. Rwanda did not limit its promotion of local content to the oil and gas industry alone.
The Local Content Unit in Rwanda has been expanded to every sector of the economy so as to promote local production, attract investors, and encourage knowledge transfer from expatriates to the citizens.
Thus is where the move by Senator Teslim Folarin becomes laudable, the Senator, who represents Oyo Central Senatorial District and also doubles as the Chairman of the Senate Committee on Local Contents saw his bill passed a second reading. The bill seeks to provide for the development, regulation, and enforcement of Nigerian Contents in all sectors of the Nigerian Economy as well as review some of the lacunas in the Nigerian Local Content Act 2010 as complained by the operators in the sector. One may not fully appreciate the implication of a smooth sailing of this bill unless one looks at our import-export performance.
You will be appalled to discover that even in areas where Nigeria is expected to have a comparative advantage over other countries, the sheer low patronage of our local producers has made it a terrible story. It has been a case of selling to buy again or buying what we produce or can produce.
Let us also look at our performance in the area of leather for example. It is important to note that Nigeria is a consistent supplier of leather to both European and Asian markets and our leather ranks amongst the highest quality globally. Our leather is sought globally because the free-range system of rearing cattle confers toughness on the hides and skins gotten from our cattle and Nigeria is home to the unique and much sought-after Red Sokoto goat skin leather. Italy and Spain are the largest destinations of Nigerian leather as they take over 71% of total Nigerian exports on leather. India and China is the largest destination of Nigerian leather in Asia. The records have it that Nigeria makes an average of US $600m to US $800m annually. That should call for joy but wait for it. The Aba shoe market imports much of its leather from China whereas we tan about 50m skin annually.
In fact, we are an import destination for leather/shoes from Turkey, China, Spain, and Italy. So while we sell our skins to Italy at a near pittance and starve our FLPs, Ralph Lauren and Louis Vuitton returns it to our bourgeoning populace at a price beyond the reach of the populace. Of course we must not shy away from the danger that our love for ponmo poses to the gains we could garner from the leather industry.
The tale is not different when we look at our balance of trade in fish production as well.
According to records from Fishstat Plus, between 2006 and 2011 alone, Nigeria alone imports around $1,245,394 while the trade deficit was higher than US $750million. In fact Nigeria ranks as the second biggest cultured fish producer with much of our imports supplied by USA, Chile, and Albania. Based on the Nigeria Fisheries Statistics Report, our annual fish demand is estimated at 3.32million metric tonnes while our domestic production is pegged at just about 1.12million metric tonnes, leaving a deficit of 2.2million metric tonnes. The deficit is made up for through importation in spite of Nigeria’s natural blessing of having a coastline of 853kilometres bordering the Atlantic Ocean viz-a-viz an abundance of creeks, coastal rivers, fresh and mangrove swamps, near and offshore waters, bays, and estuaries. It is even more worrisome that the domestic production comes primarily from artisanal fishing practices and aquaculture and not industrial fishing as it is the practice in countries that have attained a level of self-sufficiency in fishing. So why are we having very little contribution from industrial fishing? The answer is not far-fetched. Asides the issue of ocean pollution and cost of procuring fishing vessels and trawlers, the fear of not getting the needed market has discouraged many an investor.
Will this bill, when enacted into law, be a silver bullet that cures all? Definitely not! However, it will set the pace for more local participation in the various industries in our economy since investors know that the market is there for them to thrive. In a time as this where the revenue from oil is taking a serious nosedive, the promotion of local contents in every sector of our economy will be the needed lubricant to oil the wheel of the economy which oil can no longer oil. With the needed contributions from the participators in various industries to the bill, one only hopes that bill will be critically x-rayed and enjoy a speedy passage. Beyond passage, it is also expected that the Folarin-led Senate Committee will work assiduously to ensure that the bill, when it becomes a law, is implemented.
The world is evolving a post-COVID 19 reality and that is aimed at promoting sufficiency. Nigeria cannot afford to be left behind. We must, in our quest to trade with the outside world, work towards reducing our vulnerability to external shocks by boosting our balance of trade and further market integration.
Amuda, Mosigbodi B. (Plato) writes in from Ibadan. He can be reached via mail on platothelaw2000@yahoo.com or on twitter on @platodele.
