SUSTENANCE OF NIGERIAN CONTENT DEVELOPMENT INITIATIVE

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SUSTENANCE OF NIGERIAN CONTENT DEVELOPMENT
INITIATIVE

• BYA. I. Okolo FNSE, FNIMech.E
  aokolo_at_peugeotnigeria.com

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INTRODUCTION

• The Nigerian content development initiative is
  aimed at ensuring that substantial proportion of
  activities, materials, engineering parts and
  human capital utilized in different sectors of
  the Nigerian economy is domiciled within the
  country.
• The domiciliation focus on local value addition,
  builds global collaboration, attracts foreign
  direct investments and promotes technology
  transfer. It supposes that multinational
  companies should transfer ownership of assets to
  Nigerian subsidiaries.
• Quite often the phrase Nigerian content
  development is substituted by local content
  development. Perhaps because only in recent years
  when local

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INTRODUCTION

• content development was introduced in the oil
  gas sector that Nigerian content development
  became widely used.
  
• Little publicity is given to efforts made in
  other sectors of the economy to develop and
  enhance local content of goods and products
  manufactured locally. It is important to x-ray
  efforts made in local content development in
  previous years, identify difficulties encountered
  and evolve policies that will ensure that the
  current drive is sustained.
• Local content in the manufacturing sector infers
  the manufacturing of products locally, in
  companies in Nigeria, with the participation of
  Nigerian experts.

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THE MAIN THRUST OF NIGERIAN CONTENT DEVELOPMENT
TODAY

• Some school of thought anchor national content
  agenda on oil gas industry in view of the
  capital spent and broad linkages with other
  sectors of the economy.
• This perhaps informed why currently the Nigerian
  government has anchored this agenda on the oil
  gas industry. In Nigeria the oil industry spends
  about 12Bn annually comprising 54 in
  procurement, 26 in fabrication and installation,
  20 in engineering construction. These 3 sections
  have framed the primary focus of the Nigerian
  content agenda.
• There is no doubt that today the Nigerian content
  agenda is centered on the oil gas sector with
  other sectors of the economy receiving very
  little attention (generally mentioned but not
  backed-up with action).

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• Mr. Sola Yemi, in his letter in June 2008 to the
  Editor of Vanguard newspapers titled Kudos to
  Local Content Manufacturers expressed his
  pleasure following the recent news in some
  publications that Nigerian companies can now
  produce to meet all the steel and pipe product
  standards for the oil gas industry. He noted
  that 54 of Nigeria oil gas expenditure is on
  procurement and most of these procurements are
  steel products. That bit of news gave him cause
  to jubilate.
• This piece of information was cited to buttress
  the point that to the average Nigerian, local
  content development or Nigerian content
  development as known today begins and ends in the
  oil gas sector.
• Be it as it may, there have been remarkable
  achievements through the Nigerian content
  development policy in the oil gas sector.
  

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Table 1. Guidelines Issued to the Oil Industry
for Implementing the Nigerian Content
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Table 2. Capacity Building Strategies in 4 Focus
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Table 3. Major Achievements Attained as at
December 2006
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A GLIMPSE INTO NIGERIAN CONTENT DEVELOPMENT IN
THE AUTOMOTIVE SECTOR

• Just like the production / sales curve of
  vehicles manufactured locally peaked in the
  1980s, so did that of the number of automotive
  component manufacturers.
• Drawing from PAN experience, at about that period
  over 35 companies had been developed to
  manufacture numerous components which were being
  used for both production and spares for Peugeot
  cars all over Nigeria.

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A GLIMPSE INTO NIGERIAN CONTENT DEVELOPMENT IN
THE AUTOMOTIVE SECTOR CONTD.

• Just like the production / sales curve of
  vehicles manufactured locally peaked in the
  1980s, so did that of the number of automotive
  component manufacturers.
• Drawing from PAN experience, at about that period
  over 35 companies had been developed to
  manufacture numerous components which were being
  used for both production and spares for Peugeot
  cars all over Nigeria.

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PAN Local Parts Suppliers Base Across Nigeria
LOCATION OF MAJOR LOCAL MANUFACTURERS OF
PEUGEOT PARTS
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Major Manufacturers of Peugeot Parts in Nigeria
Pre-2006

• Auto Components Industries Kaduna Seat Foams
• Nasco Fibre Factory Jos - Carpets
• Polyplast Ltd Kano Seat Covers
• Norcon Ltd Kano Sound proof Materials
• Michelin PortHarcourt - Tyres
• Kumoh Ltd Kaduna Polythene Protector
• Safety Products Ltd Lagos Wiper Reservior
• Pan Brasfibre Enugu Boxer Roof Linning
• Chieme Industries Aba Peugeot Monogram, Frt.
  Grill, Wheel Cover etc

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• Monaplex Lagos 504 Fuel filter, Window winder,
  RR Light cover
  
• Universal Rubber Ltd Ibadan Pedal rubber
  other rubber parts
  
• August Moon Ltd Ibadan Wiper water hose etc
• Udofe Ind. Ltd Igarra Stamped Metal Parts
• Unisteel Ltd Kaduna Metal Parts
• Shempate Ltd Kaduna- Seat Frames, 504 Exhaust,
  Ambulance Stretcher, etc
  
• Maizuma Ltd Kaduna Bonnet Strut
• Onwuka Hi-Tek Aba Shock Absorber Plate
• Auto Components Lagos Engine Mounting Seat
  slides
  
• Canplas Ltd Lagos Flywheel Casts
• Emcon Ltd Zaria Protective Coating
• Kay Plastics Ilorin Boot trimings
• MSP Kano Steel Brackets
• Alpha Chemicon Kaduna- Radiator Coolant

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• In collaboration with PAN, all these companies
  had over the years been able to manufacture auto
  components of good quality which are used on
  Peugeot vehicles assembled in Nigeria. That
  further implies that they are capable of mass
  production
• With the decline in the automotive sector, local
  content was hard hit and tumbled down from a
  double-digit percentage to single digit.

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• Constraints of Local Content Development in
  the Automotive Sector
  
• The manufacture of automotive components locally
  is affected by the following
  
• The collapsed capacity utilization of the sector,
  which was 90 in 1901 and now below 10
  
• Lack of suitable raw materials
• Infrastructural deficiencies Precision machine
  shops, forge shops, heat treatment facilities,
  testing equipment, etc
  
• Lack of necessary competencies

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SUSTAINING THE NIGERIAN CONTENT POLICY

• To forestall the reoccurrence of the
  decline in local content development experienced
  in the manufacturing sector and guarantee
  consistent progress, it is important that some
  measures be put in place to create enabling
  environment in the Nigerian economy

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I. Legal Frame Work for the Nigerian Content
Development

• Nigerian content policy Clearly defining
  
  
• the vision, outlining government
• objectives and outlining policy
  guidelines.
  
• Nigerian content bill defining powers roles,
  
  
• stipulating principles and providing legal
  
  
• backing to be enacted by NASS.
• Constitution of regulatory agency(ies) to
• enforce Nigerian content regulation with
  set
  
• targets penalties.

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II. Joint Venture Agreements

• To sustain the current drive for Nigerian content
  development it is important for government to
  evolve policies to encourage both local and
  foreign companies to enter into joint venture
  agreements to operate in Nigeria.
• The foreign company provides its skills and
  expertise while the local partner provides the
  company a local presence.
  
• Some countries require foreign companies to form
  joint ventures with domestic firms in order to
  enter a market. This often facilitates technology
  transfer to the domestic partner.

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JVA Contd.

• Joint ventures will ensure the following
• Access to new customers
• Increases economics of scale
• Spreads costs and risks
• Access to new technologies
• Managerial practices
• Financial resources
• Transfer of technology skill

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III. Introduction of Advanced Manufacturing
Technology in Manufacturing Sector

• To obtain good quality finished products that
  will match their imported equivalent, there is
  need for more domestic companies to adopt
  advanced manufacturing techniques in their
  operations.
• Stakeholders in the actualization of this in the
  Nigerian economy will include educational
  institutions, research institutes, NASENI, BOI,
  ETF, PTDF, RMRDC, SON, SMEDAN, MAN, NASSI, SMEs,
  entrepreneurs and investors.
• Advanced manufacturing technology borders on the
  introduction of computers in the manufacturing
  environment

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Fig. 2. CIM Environment
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• It gives the companies the following
  advantages
  
• Flexibility and ability to produce quality
  parts/products at lower cost.
  
• Resilience to stay in competition.
• Computer integrated manufacturing (CIM) of which
  CAD CAM are constituents, ensures that the
  company stay ahead in competition.
  
• To sustain the current Nigerian content
  development policy of the government, it is
  essential at this stage for government to through
  relevant agencies to motivate investors and
  companies to embrace advanced manufacturing
  technology.

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Table 4. Opportunities in Product Development
Manufacturing in a CIM Environment
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If properly executed the effect on the economy
will be outstanding. This however must be handled
by appropriate agencies otherwise it will turnout
to be one of those programmes in the annals of
government projects.It had worked in other
countries and it ought to work in Nigeria.In
India it has so strengthened the SMEs that India
is now an auto-component sourcing base for most
known automobile brands
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Table 5. Auto-components Sourced from India by
Major Auto-Manufacturers
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IV. Industrial Clusters

• Considering the difficulties experienced
  by many SMEs in the country and indeed many
  companies in Nigeria to access robust funds from
  financial institutions, a properly planned and
  executed industrial cluster policy by government
  will have a far reaching effect in sustaining the
  Nigerian content policy.
• The success of many nations industries is
  not because of isolated industries, but in
  cluster of industries. In industrial cluster the
  organization is linked through vertical
  (buyer/supplier) or horizontal (customers,
  technology, channels, etc.) relationships that
  the different stakeholders have.

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CONCLUSION

• To sustain the Nigerian content initiative,
  government should ensure the following
  
• That it is backed-up by appropriate legislation.
  There is need for enactment of a Nigerian content
  bill which clearly defines the powers and roles
  of all stakeholders, stipulating principles and
  special conditions as it affects the different
  sectors of the Nigerian economy.
• That a broad-spectrum approach be adopted. There
  should be deliberate effort by the government to
  encourage enhancement of local content in all
  pivotal sectors of the economy especially in oil
  gas, automotive transport, building
  construction sectors.
• Furthermore, there ought not to be an overbearing
  concentration only on materials and
  

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• parts but also enhancement of Nigerian content
  in the human capital as well as in specialized
  services.
  
• The Nigerian content initiative was heralded by a
  lot of loud talks and hope has been wiped up in
  the mind of concerned Nigerians. Without good
  policies put in place, it will go the same way
  many such laudable intentions went.
• What people see or perceive is what prompt them
  to action. Thus for the Nigerian content
  initiative to be properly driven, there is need
  for a good road map clearly showing government
  intentions and objectives.
• That the good intention be backed up with a
  Will to succeed! This Will translates to
  establishment of necessary regulatory control
  agencies to monitor and ensure that the defined
  road map is maintained and adjusted as need
  arises.

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• EVERY NIGERIAN ENGINEER HAVE A ROLE TO PLAY IN
  ENSURING THE SUCCESS OF THE NIGERIAN CONTENT
  DEVELOPMENT DRIVE !
  
• HAVE YOU IDENTIFIED YOUR NICHE ?