1.1 Introduction
Local content is the development of local skills, and use of local manpower and local manufacturing (Oil and Gas, 2010). The need for resource-rich Nigeria to assume control of the exploration, exploitation and production activities in the oil and gas sector and to harness the potentials of this most strategic industry in order to generate more value-added, seems to be receiving much desired attention from all the stakeholders. According to industry experts, the main reason for this situation is attributed to the problem of low local content, which is a situation where most of the service contracts are awarded to foreign firms because local indigenous firms allegedly lack the requisite skills, technical expertise, manpower and production capacity and capability to compete favourably (Aneke, 2002; Ariweriokuma, 2009).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
1.2 Background of Study
The local content policy action started in 1971 through the establishment of the Nigerian National Oil Corporation, (NOC). NOC was established as a vehicle for the promotion of Nigeria's indigenization policy in the petroleum sector. It later became Nigerian National Petroleum Corporation (NNPC) in 1977 through NOC's merger with the petroleum ministry. NNPC flagged off the actual local content initiative through acquisition of interests in the operations of the IOCs. These interests grew to about 70%, with the responsibility of controlling all acreages and other activities. Although conscious efforts were made in the past through Regulation 26 of the 1969 Petroleum Act, enforcement of local content policy, the springboard for sustainable economic transformation of Nigeria, was mere paper work. For an industry that contributes 80% of Nigerian government revenues and 95% of its foreign exchange this is entirely unacceptable to the Nigerian government hence the clamor for change.
Shipping has for a long time been recognized as one of the strong catalysts for socio-economic development. Back in 1776, Adams Smith noted that “A business working in a country town without links to the outside world can never achieve high levels of efficiency because its small market will limit the degree of specialization”. Because shipping is one of the cheapest and efficient modes of transportation over long distances, it has since the ancient times been at the forefront of opening up of the world, and thus a major driver of the process of globalization. Shipping, especially container shipping, has been both a cause and effect of globalization. Container shipping could lay claim to being the world's first truly global industry. In fact, container shipping could claim to be the industry which, more than any other, makes it possible for a truly global economy to work. It connects countries, markets, businesses and people, allowing them to buy and sell goods on a scale not previously possible.
It is now impossible to imagine world trade, and ultimately our lives as consumers, without container shipping. Shipping has led to a phenomenal growth in world merchandise trade, which has consistently grown faster than output. In 2006, goods loaded at ports worldwide are estimated at 7.42 billion tonnes, up from 5.98 billion tonnes in 2000. The value of total world exports increased from US$6,454 billion in 2002 to US$40,393 billion in 2005, representing an increase of 64 per cent.
According to Kummi (2007), shipping has emerged as one of the most powerful socio-economic and political forces shaping the world today. The phenomenon of shipping is moving the world towards increasing and irreversible integration of economic, social, cultural and political systems. Shipping has been one of the main causes and effects of globalization. The impact of globalization on shipping, especially container shipping, has been most phenomenal. Indeed, shipping connects countries, markets, businesses and people, allowing them to produce, buy and sell goods on a scale not previously possible. It therefore becomes necessary, if not imperative for countries to try to evaluate impact of shipping trade on their economies. Consequently, this study is an appraisal of the impact of shipping trade on economic growth in Nigeria.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Challenges, Prospects and the Way Forward of Local Content in the Maritime Industry.
1.3 Statement of Problems
Investigation revealed that the maritime industry is international in nature and is acknowledged to be a very dynamic component in the socio-economic configuration of any given maritime nation. Nigeria is no exception. Even land-locked countries such as Mali and Burkina - Faso in West Africa also hinge, their economic fortunes on the maritime sector relying as it were on the port of Abidjan for import and export transactions. One major problem that has continued to plague the industry in Nigeria is the issue of adequate policy formulation and implementation, hence the contribution of shipping trade to economic growth has therefore being a subject of debate.
In traditional maritime nations such as United Kingdom, the USA, the Scandinavians, other European Countries among others, the factors of time, proper planning, co-ordination and implementation of clear-cut policies through government intervention largely account for the enviable levels of efficiency, sophistication and monumental success in their maritime activities especially in respect of its contribution to economic growth. The reverse appears to be the case in Nigeria as the fortunes of the industry have continued to suffer progressive catastrophe over the years. A very near example is the fact that the Nigerian National Shipping Line which took delivery of 19 (nineteen) brand new tonnages from European shipyards in 1979 and 1980, has not only lost all her vessels but has been liquidated altogether. This is complicated by the inability of governments of different types to float an indigenous national carrier up till date.
1.4 Aim and Objectives of Study
The aim of the study is to find out the Challenges, Prospects and the Way Forward of Local Content in the Maritime Industry of Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To find out the challenges faced by the local content in the Maritime Industry;
- To anticipate the prospect of the local content in the Maritime Industry; and
- To proffer a way out to the highlighted problems affecting local content in Maritime Industry.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What are the challenges faced by the local content in the Maritime Industry in Nigeria?
- What is the prospect of the local content in the Maritime Industry in Nigeria?
- What is the way out to the highlighted problems affecting local content in Maritime Industry?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There are no significant challenges faced by the local content in the Maritime Industry in Nigeria
- H1: There are significant challenges faced by the local content in the Maritime Industry in Nigeria
1.7 Significance of Study
The findings of this research will assist in exposing the government at various levels, and the society at large to what local content in oil and gas means, will also expose them to the challenges faced by the maritime industry in Nigeria, the prospect of the industry and the way out to the problems.
Furthermore, the conclusion made in this research will serve as a guide to the policy makers in Nigeria to formulate a reasonable policy that will take the industry forward. And finally this research will serve as a guide to other researcher who will embark on the same research in the nearest future.
1.8 Scope of Study
The scope of the research is focused on the Challenges, Prospects and the Way Forward of Local Content in the Maritime Industry.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Local Content: Is the development of local skills, oil and gas technology transfer, and use of local manpower and local manufacturing. For a more practical definition, one could say that local content is building a workforce that is skilled and building a competitive supplier base (Oil and Gas, 2010).
