Local Content Policy and SMEs Sector Promotion: The Nigerian Oil Industry Experience

Abstract

This study investigates the impact of Nigeria’s oil and gas industry Local Content policy and its implications for promoting higher participation of indigenous small to medium-sized firms within the industry. Here we present finding from multiple case studies conducted on three small to medium-sized firms and five semi-structured interviews conducted with key informants, all operating within the industry. The findings from the study reveals that the local content policy has not yet achieved significant success in enhancing higher indigenous participation, use of local technology, higher contract awards to indigenous firms and stimulating joint venture arrangements between indigenous and foreign oil firms. Specifically, issues such as lack of the local content Act, cumbersome prequalification and entry requirements, ill-equipped educational institutions, laissez-faire attitude of multinationals, ineffective monitoring and control by regulators, and inadequate financing options for indigenous SMEs still hinder the policy efficacy.