Local Content Policy and Entrepreneurs in the Nigerian Oil and Gas Industry: Determinants of Compliance and Implication for the Economy
- April 28, 2018
- Posted by: RSIS
- Category: Economics
International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue IV, April 2018 | ISSN 2454-6186
VINCENT, Moses Owede1, UDEORAH, Sylvester Alor F.2
1, 2 Department of Economics, University of Port Harcourt, Port Harcourt, Nigeria
Abstract: – The evolution of the local content policy in many countries of the world is considered a response to the call for patronage and engagement of local entrepreneurs and a possible resultant development of entrepreneurs in a particular country. The Nigerian government also deemed it necessary to design and sign into law the Nigerian Content Act which provides for the development of Nigerian content in the Nigerian oil and gas industry in the year 2010. This paper examined the determinants of compliance with the provision of the Nigerian Oil and Gas Industry Content Development Bill by entrepreneurs who owns and manage marine vessel service companies in Nigeria. Secondary data collected from the Nigerian Content Regulatory body was used in this study. Using multinomial logit and probit regression econometric technique, owning a Nigerian built and flagged vessel was not a significant determinant of compliance but rather having and operating different categories of vessels proved to be the significant determinant of compliance to the Nigerian content act by vessel owners. It was therefore recommended that the government should give grants to vessel owners to enable them acquire all the categories of vessels and hence comply with the policy to the benefit of the nation.
I. INTRODUCTION
Innovations, resulting from technology and science, has been a major force driving the oil and gas industry in most oil rich developed countries. As more “complex geologic structures” are encountered, development of improved technology in response to the challenges have made increase in oil and gas output sustainable in these developed countries (e.g. United States of America). Sadly, oil rich developing countries are yet to independently meet the level of technological advancement required for optimal performance of their oil and gas industry. Companies are increasingly required by law to ensure that host communities benefit from their operations in all ramifications. The local content policy (LCP) appears to be a potent tool to train local professionals. The question however is how to design the policy to reflect the particular needs and circumstances of each country (Nwapi, 2016). Local content policy is a deliberate effort by government to develop local talent and indigenous business through the instrumentality of the law.
