Stakeholders seek end to multiple tax, local content in manufacturing

Stakeholders in oil and gas as well as manufacturing industries have raised concerns about the implementation of some sections of the country’s local content, especially the human capital development fund even as they warned that excess levies may cripple the sector.
Coming amid an exodus of companies from both the oil and gas sector and the manufacturing industry, the Manufacturers Association of Nigeria (MAN) and other key players in the sector are asking for a new local content law that would be strategically designed for the sector.
But the stakeholders, at the ongoing Practical Nigerian Content Forum in Yenagoa, Bayelsa state, said due diligence that would include proper regulation, incentives, enforcement and standardisation is highly needed if the plan would work.
Speaking at the conference, the Chairman of the Independent Petroleum Producers Group (IPPG), Abudulrazaq Isa, said the requirement that industry participants set aside three per cent of project cost (projects above $1 million) to conduct local content training should be reversed.
“While this is undoubtedly a laudable initiative, we must consider that it amounts to a multiplication of levies as industry participants are already equally required to contribute a separate one per cent of total costs as Content Development levy.
“This invariably leads to higher project costs, especially as the training is not allowed to be provided directly to company staff and service providers. Due to this and other contractual or administrative reasons, the process of complying with local content requirements has, on many occasions, proven to significantly increase the overall cost of delivering projects in Nigeria,” he stated.
At a time when the government is looking for more investment, he said, the development could deter investors, adding that the local content policies must be constantly evaluated to ensure that they are continually fit for purpose and not counter-productive to the country’s long-term industry growth.
He said the industry faces pressure to remain profitable and cost-efficient as it grapples with competition from other investment destinations.
“Most critically, because of the strict local content requirements, we have gradually seen a reduction in the presence of leading international oil and gas service providers, many of whom are leaving Nigeria in droves,” Isa said.
Minister of State for Petroleum (Oil), Heineken Lokpobiri, said divestment and exit of the oil companies creates more opportunities for Nigerian companies.
Represented by the Permanent Secretary of the Ministry of Petroleum Resources, Gabriel Aduda, Lokpobiri said divestment, domestication and decommissioning are not what to run away from but an avenue for indigenous entities.
“Nigeria’s commitment to fostering local content within the oil and gas industry remains unwavering. The diversification of our economy and the empowerment of our people through the expansion of indigenous participation in the sector is the cornerstone of our national agenda.
“We recognised that divestment presents various challenges, but they also have opportunities for strategic partnerships, technology transfer and local capacity building. We aim to leverage this foundation to empower Nigerian businesses, create better employment opportunities and stimulate growth,” Lokpobiri said.
The Director General of MAN, Segun Ajayi-Kadir, said the expansion of a local content law in the manufacturing sector is highly needed.
According to him, the success recorded in the local content of the oil and gas sector could be replicated in the manufacturing sector provided the country is ready to do the right thing.