Former Nigerian President Goodluck Jonathan has pointedly criticized Western oil companies operating in Nigeria, accusing them of hindering the nation’s development by prioritizing outsourcing and importation over local capacity building. He contrasts this with the approach taken in China, where, despite oil discovery occurring later than in Nigeria, the industry fostered local production and expertise. Jonathan argues that this disparity stems from the absence of robust legal frameworks and a lack of deliberate effort to transfer technical knowledge to Nigerians during the early years of oil exploration in the country. This, he posits, has resulted in a scenario where oil wealth benefits foreign entities more than the host communities and the nation as a whole. He emphasized that the bulk of investment funds purportedly injected into Nigerian oil projects end up being spent abroad on imported materials and expertise, leaving minimal positive impact on the local economy.
Jonathan highlighted the stark difference in approach between Western oil companies in Nigeria and the development witnessed in China. While Western companies operating in Nigeria relied heavily on importing even basic necessities for their operations, China, despite a later oil discovery, prioritized building local manufacturing capabilities. This divergence resulted in a situation where China achieved substantial self-sufficiency in oil industry supplies and services, whereas Nigeria remained heavily dependent on foreign providers. This, Jonathan argues, perpetuated a cycle where Nigerian communities and businesses derived little benefit from the oil resources in their land, while profits flowed primarily to external companies and countries. He lamented the missed opportunity for Nigeria to develop a robust and independent oil industry, similar to China’s model, due to the lack of foresight and legal frameworks that would have mandated local participation.
Jonathan traced the historical deficiency in Nigeria’s oil industry legislation, emphasizing the belated arrival of laws that could have protected Nigeria’s interests. He pointed out that the key legal frameworks governing the oil industry were either colonial relics or enacted long after oil had been discovered in commercial quantities. This, he argues, created a legal vacuum that allowed foreign companies to operate with little regard for local development. He specifically referenced the Mineral Oil Ordinances of 1886 and 1914, highlighting their colonial origins and minimal Nigerian input, and contrasted them with the Petroleum Act of 1969, passed well after Nigeria’s independence and the commencement of commercial oil production. This delayed legislation, Jonathan contends, allowed foreign companies to entrench practices that prioritized their own interests, hindering the growth of indigenous capacity and expertise within Nigeria’s oil sector.
The former president underscores the significance of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010, which he signed into law, as a turning point in the country’s pursuit of local content development within the oil and gas sector. This act, he asserts, addressed the long-standing legislative gap that had allowed foreign companies to dominate the industry with limited benefit accruing to Nigeria. Jonathan’s personal experience leading a trade delegation to China in 2000, while he was Deputy Governor of Bayelsa State, exposed him to the stark contrast between China’s approach to oil industry development and Nigeria’s. Witnessing the level of local content achieved by China, where a majority of oil industry needs were met by domestic manufacturers, spurred Jonathan to prioritize the enactment of the NOGICD Act.
The catalyst for Jonathan’s urgent push for the Nigerian Content Act was his visit to Daqing, China’s “oil capital.” The visit demonstrated the potential for local capacity building within the oil sector and revealed the shortcomings of Nigeria’s approach. He noted that despite Western companies discovering oil in China over a decade after Nigeria, China had achieved a significantly higher degree of local content by the year 2000. This realization, that Nigeria had lost decades of potential development due to a lack of local content policies, convinced Jonathan of the urgent need for legislative change. The Chinese experience highlighted the possibility of creating a robust local supply chain and technical expertise within the oil sector, something severely lacking in Nigeria at the time. This disparity, coupled with the realization that substantial investment sums were being spent outside Nigeria by operating companies, fueled Jonathan’s drive to champion legislation that would prioritize local content.
Jonathan commends the subsequent implementation of the Nigerian Content Act, praising the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Felix Ogbe, for its effective enforcement. He believes that the act represents a critical step towards rectifying historical imbalances within the oil industry and ensuring that Nigerians benefit more directly from the country’s oil resources. The Act mandates participation of Nigerian companies and labor in the oil and gas industry, promoting technology transfer and the development of indigenous capacity. This, according to Jonathan, addresses the long-standing issue of foreign companies dominating the industry to the detriment of local communities and the Nigerian economy. He sees the Act as a legacy of his administration, a necessary corrective measure to ensure a more equitable distribution of benefits from Nigeria’s oil wealth.
