Opinion and Analysis
Workers at the Ngamia 1 oil rig in Turkana County. Upstream service
providers in Turkana and other basins are rapidly increasing their
capacity while enhancing standards and competitiveness. Photo/FILE
By George Wachira
In Summary
- Local content adds national value as it creates new jobs and wealth, while reducing capital flight.
Local content is the commitment to build on the
capacity and capability of local people and businesses to support the
long-term development of various economic sectors.
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It involves prioritisation of local sourcing of services,
materials and skills. Local content adds national value as it creates
new jobs and wealth, while reducing capital flight.
Local content policies and practices were with us
in the 1970s and these were anchored on the slogan “Use Kenyan and Buy
Kenyan”.
Enforcement was mainly through the foreign exchange
control instruments, selective licensing, and credit facilitation. Come
the economic liberalisation of 1990s, local content practices fizzled
away.
Later when globalisation set in, we blindly
accepted the principles of free global flow of capital but forgot to
create our own capacity to effectively partake in that flow.
Kenya was left dependent on international sourcing
of services, finance, materials and consumer goods. This consistently
weakened the national balance sheet.
Currently, local content across all economic
sectors is a subject requiring articulation as a national policy and
priority at the highest level of leadership. This is the only way to
trigger and entrench a mental shift among Kenyans and investors to
embrace local content.
I will now turn to oil and gas local content, which
was the focus last week of the Local Content Convention organised in
Nairobi by Oil & Energy Services, a “local” upstream oil and gas
service provider.
The star presenter at the convention was Mr Ernest
Nwapa, the CEO of Nigerian Content Development Board, which is the
institution set up to implement the Nigeria Local Content Act (2010) in
the oil and gas sector.
The CEO shared experiences on how Nigeria has implemented local content over the past four year.
Mr Nwapa said that without a definite law, no
investor would feel compelled to initiate measures to source locally. A
high pitched policy and an effective anchor law are the starting points
for effective local content implementation.
The Nigerian local content was championed by none
other than President Jonathan Goodluck. He cautioned that local content
would be resisted locally and globally. There will be “experts” who will
come up with a thousand reasons why local content cannot succeed.
There will be vested interests and cartels who will
work against local content and politicians who will easily succumb to
investor pressure. But with a law and an effective institution in place,
there will be no choice but to implement it.
In Nigeria, the local content law has directly
prompted manufacturing of equipment and materials that are listed by the
law as “must” for local sourcing.
What was for a long time accepted as “cannot be
manufactured in Africa” is actually now being made in Nigeria, and to
international standards.
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