In this article, Eileen Shaiyen applauded the recent executive order on local content, saying it was a major catalyst the economy has been longing for
The recent Executive Order on local content may be one of the most unique decisions of this government since its inception, if well implemented. This is according to a recent review report by H. Pierson Associates. It is a major catalyst the economy has sought over the years. With the federal government being about the biggest spender currently, such a directive, which states that “all Ministries, Departments and Agencies (MDAs) of the FGN shall grant preference to local manufacturers of goods and service providers in their procurement of goods and services”, could have far-reaching implications.
The Executive Order stipulates that within 90 days of the date of the order, the heads of all federal government MDAs “shall propose policies to ensure that the federal government’s procurement of goods and services maximises the use of goods manufactured in Nigeria and services provided by Nigerian citizens doing business as sole proprietors, firms, or companies held wholly by them or in the majority”.
Giving adequate attention to the Services Sector in the local content and “Made in Nigeria” drive is very important. The Services sector remains the largest sector in the Nigerian economy, accounting for 50.24% of the GDP in Q3 2016. The sector remains the fastest growing sector with an average growth rate of 3.90% over the last 7 quarters and a projected average growth of 2.54% over the next three years. This calls for a significant focus on the Services sector in achieving the priorities of the President Muhammadu Buhari administration-led 2017-2020 Economic Growth Plan.
According to the H. Pierson review, direct benefits of this Executive Order if properly implemented, include significant expansion in local demand on existing and potential production facilities, resulting expansion in capacity utilisation, the multiplier effect on increased employment across sectors, reduced imports, large foreign exchange savings and less pressure on the Naira. If this expansion occurs alongside improvement in power supply, the overall impact on the country’s gross domestic product and reduced poverty levels should be significant. It is however important to note that the full impact of these benefits will not occur immediately but should be expected to occur gradually over the coming years
This optimistic view of the transformational benefits of this new local content Executive Order is based on the gains observed to date from the Federal government’s 2010 Local Content Law for the Oil and Gas sector, which has migrated local content in this previously closed up sector, from little or nothing to about 30% today. Backed by this reinvigorated Federal Government commitment to local content, this percentage is bound to see a jump in the coming years. According to Mrs. Shaiyen, CEO of H. Pierson, the oil and gas sector has served as a pilot in demonstrating the possibility of successfully implementing such a policy across sectors. We do also know that the power sector, which had initiated its own local content guidelines prior to now, holds great potential for the economy, once its key bottlenecks are removed and this executive order is vigorously rolled out. In all of this, one must commend the roll played by the private sector through the Nigeria Economic Summit Group (NESG) in galvanising attention to the need for a strong “Made in Nigeria” policy framework. This was the theme of its 22nd Summit which held in October 2016.
While the federal government’s local content Executive Order is a major step in the right direction, a few other initiatives will add more impetus to its success. First is the need for the federal government to harmonise all existing local content policies and guidelines in the country in order to achieve harmony in implementation. For H. Pierson, there is also the need for the States and Local Governments to follow suit in rolling out and enforcing local content policies at their level. With one or two states already taking the initiative on this, all of the other states should quickly do the same. While it is expected that each state takes the initiative on this, the involvement of the states can also be facilitated by the federal government, through the National Council of States. Also important for federal government’s consideration, is the need to formalise the framework for the implementation of this new cross-sectoral national local content drive.
Section 6 of the local content Executive Order states that “Within 180 days of the date of this order, the Minister of Industry, Trade & Investment in consultation with the Director-General of the Bureau for Public Procurement shall submit to the President, a report on the Made-in-Nigeria initiative that includes findings from paragraph 4 above. This report shall include specific recommendations to strengthen the implementation of Local Content Laws and local content procurement preference policies and programmes”. Getting implementation right is therefore fundamental. A consideration here could be the expansion of the scope and mandate of the Nigeria Content Development Monitoring Board. According to the H. Pierson review, also key, is the need for a framework for tracking and continuous Monitoring and Evaluation of the progress and impact of this national local content initiative against a clear road map and pre-set targets and milestones.
Such progress information should be publicly reported for the citizenry to track and appreciate the migration. Finally, a major change initiative as this will be boosted through the use of change champions in the public sector. In this regard, the federal government will do well to get the leadership of the executive, and then the judiciary and legislature, to visibly walk the talk. Also state governors and their public officers must be seen by their citizens to be truly patronising of Made in Nigeria goods and services, especially across the government’s priority sectors of Education, Health, Agriculture, Infrastructure, etc. Alongside this, the government should work with various private sector groups to further deepen the citizens’ taste for Made in Nigeria goods and services which we have seen in fashion, music, food, the arts, etc. and which can be extended to other aspects of our consumption.
Clearly, the local content Executive Order is laudable and can be the catalyst to transform Nigeria if implemented committedly, with consistency and great sincerity as above.
– Mrs. Eileen Shaiyen, is MD/CEO, H. Pierson