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Dangote Group: Boosting Economic Growth With Local Content Initiatives

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Recently, the Nigerian Content Development and Monitoring Board (NCDMB) commended the management of Dangote Petroleum Refinery and Petrochemical Free Trade Zone Enterprises (DPRP) for its local content initiatives. In this piece, SHOLA BELLO examines how Dangote Group is adhering to the local content law in the execution of its projects.

Investment in local content or backward integration is critical to sustainable growth of any economy.  Local Content is the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilisation of Nigerian human, material resources and services

Aware of this economic strategy, Dangote Group has been in the forefront, advocating for the use of local content as a way of improving the economy, thereby, reducing the over dependency on foreign materials.

Events have shown that a country’s economy is progressive and sustainable if its economic fundamentals are strong. With proper governance, a country’s labour market and resources can be utilised efficiently to fulfil its economic requirements.

Prior to the recent recession from 2016 to 2017, Nigeria experienced rapid but low-quality growth for a decade. This was accompanied by limited structural change and little economic transformation.

Sadly, the share of manufacturing in Nigeria’s Gross Domestic Product (GDP) is low relative to some countries and the country’s heavy reliance on oil and gas exports has meant little attention has been paid to developing the manufacturing sector or diversifying into more complex products.

However, experts are of the view that boosting backward linkages could facilitate higher value-added in processing and manufacturing  activities in Nigeria.

They believe that, if properly done, this could have positive effects in terms of stimulating economic development; promoting the development of local industries; creating economic linkages and building local capacity.

Other positive effects it could have include: capabilities and technologies; developing skills within the workforce; boosting employment and minimising capital flight.

Nigeria has long experience of local content policy in the oil and gas sector and it has also applied local content policy in other sectors.

In the cement sector, through Dangote Cement, Nigeria has achieved backward integration, with more than 95 per cent of the materials used for cement production in Nigeria sourced locally as a result of the industry’s 2002 Backward Integration Policy.

Similarly, there have been several policies to promote backward integration in food processing.  For instance, Dangote Sugar has developed an integrated sugar cane plantation, spanning the whole supply chain from milling through to sales and distribution.

Recently, the Nigerian Content Development and Monitoring Board (NCDMB) commended the management of Dangote Petroleum Refinery and Petrochemical Free Trade Zone Enterprises (DPRP) over its adherence to the local content law in the execution of its projects. Satisfied with such initiative, the board declared its intention to further partner with it for effective implementation of the local content policy in the country.

Director, Monitoring & Evaluation, NCDMB, Mr. Akintunde Adelana, who represented the board’s executive secretary, Engr. Simbi Wabote, made this disclosure recently during the DPRP Nigerian Content Sensitization/Awareness Creation Programme, titled: “Let’s Walk the Nigerian Content Talk Together,” at Lekki Free Trade Zone, Lagos.

According to him, the Dangote Refinery project is expected to close a major gap in the supply of petroleum products in the country.

Wabote said “we consider this as a very important project and we are willing to partner with the company to ensure full implementation of the local content policy. We embarked on this journey with the company a long time ago and we are ready to partner with the Dangote Group.

“Part of what you see to today is part of our efforts to ensure that the company and its contractors comply with the local content policy and they have put in a lot of efforts in this regard”, he added.

Speaking further, Wabote said the country recorded loses prior to the enactment of the local content policy, which he noted, came from jobs executed abroad by International Oil Companies (IOCs), operating in the country.

“The narrative then was that nothing can be done in-country. Plants and modules were fully fabricated offshore without any structure in place to achieve knowledge transfer. Before 2010, we had no active dry-dock facilities. The few we had were abandoned and left to rot away. Today, we have four active dry docking facilities in Port Harcourt, Onne, and Lagos,” he added.

He said the board’s mandate is to develop local capacity in key areas such as manufacturing and fabrication and promote indigenous ownership of assets and utilisation of indigenous assets in oil and gas operations.

Wabote added that the board’s responsibility also include linking the oil and gas industry  with other sectors of the economy, enhance multiplier effect of oil and gas investments in economy and develop pool of competitive supply chain rooted in oil bearing communities.

Cautioning defaulters of the Nigerian Content Policy, Wabote said non-compliance with the law, will result to the suspension of projects/contracts, penalty of five per cent of project sum, withdrawal of NCDMB’s services, and project cancellation unrecoverable sunk cost.

Other penalties for non-compliance, according to the executive secretary, are escalation to other regulators to withdraw or suspend license, withdrawal of approvals or de-classification of contractor from pre-qualification list, application of the full weight of the law in accordance with Section 68, and publication of non-compliant operators in newspapers and professional gazettes.

Also speaking at the occasion, the chief operating officer, DPRP, Mr. Giuseppe Surace, said the programme was organised to create awareness among the company’s contractors on the requirements of NCDMB, as part of moves to ensure the local content policy take roots in their day to day operation.

“The programme was organised to ensure that our contractors are well informed about the Nigerian Content Act and this is expected to assist them with the execution of not just the Dangote project, but other projects in their portfolio”.   

“However, industries or local investors need institutions, infrastructure and policy support from the government in order to develop and contribute effectively to the growth of the economy, through local content improvement in Nigeria. Also, a strategic approach to local content has realistic targets that contribute to lasting benefits in the long term”, Surace added.

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