Even as modalities for commencement of implementation are still being fine-tuned, Nigerian banks have given conditions which indigenous companies wishing to secure facilities to take advantage of the Nigerian Content Act must meet.
The blue print was one of the high points of a recent meeting between chief executives of these banks and the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Ernest Nwapa.
Group Managing Director-Designate of United Bank for Africa (UBA) Plc, Mr. Philip Oduoza who spoke the minds of his colleagues disclosed that the conditions would ensure financial discipline by the beneficiaries of the fund and also enable the banks to give out some medium and long-term loans if the conditions were favourable.
According to him, “one of the conditions is the fact that the board needs to assist us in terms of screening who should benefit from this, because the moment this is put together, every person will jump into it and feel that it is something they can do. So, to that extent, we will like to have a preliminary screening to be done in terms of who is capable and who will be able to handle the projects.
“The second one is in terms of capacity building- in terms of training. So, I believe that the board should also assist in building the local capacity- in equipping people with the right knowledge and so on. Also, the IOCs, I think, they have a role to play here because in supporting this particular project; they should be able to equip the local contractors with the necessary technical competence and knowledge, similar to what they do,” he said.
The third condition is that the beneficiaries must imbibe the normal behaviour expected from borrowers, which is financial discipline. According to him, once a job is given to the local operators, they should be able to execute them and also repay the loans.
A fourth condition, he said, is that the IOCs must go beyond helping to develop local capacity and also ensure that they put domiciliation in place.
“The IOCs will tell us that they give domiciliation and when you pay, we are all human beings – at the end of the day, when we deliver the loan and the job is executed, you will see some diversion risks that you have to deal with, which is a problem. So, I think what the IOCs need to do is to go beyond helping to develop local capacity and ensure that domiciliation is put in place and we will all work together towards that,” he said
Oduoza said that the banks would assist the beneficiaries in putting up proper books of accounts, adding that most of the operators do not keep proper books of accounting. This he stated is the fourth condition.
“And for the economy in general, I believe this is a very laudable project, which I believe the banks are going to support. Again, it is coming at appropriate time because, in terms of financing, you find out that all the banks are virtually awash with liquidity and they are looking for outlets for lending. In fact, this is going to provide a very broader outlet for lending, as far as the banks are concerned, and at very reasonable costs, in terms of interest rates and all other fees,” he said
The Nigerian Content Act was signed into law recently to build local capacity and capability in Nigeria’s oil and gas sector.
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