Local Content in the Extractive Resource Industry in Nigeria

Most of Nigeria’s application of local content in the extractive industry is focused on the oil and gas sector, the mining sector receiving only marginal attention, without a well-established policy or legislation. In the oil and gas sector, local content is pursued through three key vehicles: state participation, the Oil and Gas Industry Local Content Development Act, 2010, and the marginal fields policy. These vehicles express the Nigerian government’s understanding of local content in the oil and gas sector, which is not limited to value addition. In its broadest sense, value addition is about what the industry as a whole can contribute to the wider economy, for instance, the contributions of oil and gas companies not only to the domestic oil and gas industry but also to the growth of other industries. The key vehicle being utilised to achieve value addition is the afore-mentioned Act. Nigeria’s local content policy, however, embraces the somewhat wider concept of ‘local participation’. Local participation aims to ensure that the citizens take charge of the development of the industry. The extent to which the content of the industry is local is therefore determined not only by the value brought to the local economy by the industry, but also by the extent to which the participants in the industry are ‘local’. The key vehicles being utilised to achieve local participation are state participation and the marginal fields policy. This chapter discusses each of the three vehicles, highlighting their successes and challenges.