The map of African oil and gas production has changed dramatically over the past quarter century. Once limited to just a handful of countries, hydrocarbon discoveries now span across nearly 40 of Africa’s 54 nations, creating new questions about how these resources will benefit local economies.
Simbi Wabote, who served as Executive Secretary of Nigeria’s Content Development and Monitoring Board (NCDMB) from 2016 to December 2023, has become a go-to advisor for African nations crafting their own approaches to local participation.
“A lot of these countries, particularly African countries, come to study what we have done in Nigeria,” Wabote said in a recent interview, noting delegations from Gabon, Ghana, Tanzania, Burkina Faso, and Ivory Coast have sought Nigeria’s guidance.
The interest stems from concrete results. Under Wabote’s leadership, Nigeria’s local content participation grew from approximately 18% to 54% in seven years. This progress has made Nigeria’s framework a model many nations hope to replicate.
Start with Reality Assessment
Wabote emphasizes that countries must first understand their current capabilities before setting requirements.
“You must carry out a study to understand the present capacity of the country in providing service to the oil and gas sector. Because if you don’t study that, then you might be chasing the wrong horse,” Wabote explained.
Without this foundational assessment, countries risk creating policies detached from on-the-ground realities.
The gap analysis clarifies both limitations and existing strengths, identifying which sectors can realistically support local participation immediately and which require development over longer timeframes.
Build Capacity Deliberately
After establishing the baseline, Wabote recommends countries develop systematic approaches to capability development.
“You then have to put together a framework for capacity building of the human resources that you have, capacity building of the industry that you are trying to create,” said Wabote. “This, you have to be deliberate about.”
Capability development operates on dual tracks: preparing the workforce through training programs while simultaneously strengthening local companies through infrastructure and technology access.
Successful policies typically require both educational initiatives and contractor development programs to build comprehensive industrial capabilities.
Address Financing Barriers
Access to affordable capital remains one of the most significant obstacles to local participation across developing nations, according to Wabote.
“Most of the local entrepreneurs who want to do business with the oil and gas sector have a challenge with access to funding,” he noted, pointing to interest rates of 24-25% faced by Nigerian businesses.
This financing disadvantage makes competition with international firms nearly impossible. Foreign companies typically access capital at single-digit or even negative interest rates, creating an inherently uneven playing field.
Drawing from Nigeria’s experience implementing a $350 million Nigerian Content Intervention Fund, Wabote advocates for targeted financing solutions.
“You need to develop the funding framework to say, okay, if we have these local companies, how are we going to ensure that they are adequately funded?”
Nigeria’s fund achieved a 98% repayment rate while supporting approximately 72 companies—a stark contrast to the 50-60% default rates common in the broader banking sector.
Maintain Industry Standards
Oil and gas operations demand exceptional safety and quality standards. Wabote warns that local content frameworks must respect this fundamental requirement.
“The oil and gas business does not condone acts that are not safe,” he said. “If anything goes wrong—as an example, you are drilling a well, two kilometers deep offshore, 150 kilometers away from shore—you imagine what will be the potential (danger) in terms of accident?”
Frameworks that balance local participation with rigorous standards tend to include phased implementation and certification pathways that align with international requirements.
Government Must Lead
Perhaps Wabote’s most pointed guidance focuses on the need for government intervention. Market forces alone, he contends, will not drive the necessary transformation.
“If you leave the international oil companies alone, they will default to the contractors that they know,” Wabote observed. “The driver for any project engineer is cost, schedule and safety.”
This reality demands that governments accept short-term costs for long-term benefits. Wabote frames the issue bluntly:
“IOCs will come to you to say, ‘Hey, the local businesses are costing us 20% more than the international business.’ You will accept that you’re ready to absorb that 20% cost, because over time they will become cheaper eventually, in terms of cost of labor and the rest.”
Accept The Long View
Wabote repeatedly frames local content development as a gradual process rather than a quick fix.
“Local content in itself is not a sprint, it’s a marathon. It has to be consistently developed over time,” he said.
Countries must resist pressure for immediate results that might lead to paper compliance without meaningful capability development. Policy frameworks need realistic timelines and progressive targets matched to actual capacity growth.
Look Beyond Borders
As local capabilities mature, Wabote points to regional collaboration as a necessary expansion path.
“You have trained people, you have built contractual capability, but jobs are not coming through. So what you have to do is to say, okay, where else can we look at? Is it Ghana to be able to export our capacity to Ghana?”
Regional markets offer more realistic competitive environments than global ones, particularly for newly developed local companies. As Wabote noted, “It is now left for those who have built capacity over time to extend that capacity they’ve built into other African countries.”
The implementation of the African free trade agreement creates additional pathways for this regional approach.
Learn From History
Nigeria’s experience offers a cautionary tale about the consequences of failing to develop local participation, according to Wabote.
“We explored and exploited for hydrocarbon, and we sold everything out. We never participated,” he recalled. “Loads of jobs were lost. A lot of money was lost by the country because of lack of participation.”
For Africa’s newer producer nations, well-crafted local content frameworks present an opportunity to avoid repeating these outcomes. By balancing ambition with practical implementation steps, these countries can ensure their resource wealth translates into genuine economic benefits for their populations.
