Magazine article New African

What New African Oil Producers Can Learn: Kwamina Panford Writes on How Ghana and Other African Nations Can Avoid the Resource Curse in the Area of Petroleum. He Strongly Advocates Using Petroleum to Create Jobs through Industrialisation, and Less Emphasis on the Export of Crude Oil and Unprocessed Natural Gas

Magazine article New African

What New African Oil Producers Can Learn: Kwamina Panford Writes on How Ghana and Other African Nations Can Avoid the Resource Curse in the Area of Petroleum. He Strongly Advocates Using Petroleum to Create Jobs through Industrialisation, and Less Emphasis on the Export of Crude Oil and Unprocessed Natural Gas

Article excerpt

THE CASES OF NIGERIA, ANGOLA, AND EQUATORIAL GUINEA, which are sub-Saharan Africa's major petroleum producers, are instructive regarding how oil and gas affect local employment and job creation, if judicious and deliberate policies are not put in place and on time. The evidence gathered for this article shows that in Africa generally, petroleum production has had a minimum impact on job creation and employment and even standards of living and poverty.

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For instance, in spite of the claim by the government of Equatorial Guinea that it provides 17% of the natural gas used to heat US homes and for cooking in these homes, the Central African nation is still one of the least developed, and has one of the worst child and maternal death rates.

Nigeria and Angola's situations may not be as dire, but they do not lag far behind Equatorial Guinea's appalling human development indices. Many factors account for these petroleum-rich nations poor human development conditions but I present only a few here. The experience of both Angola and Equatorial Guinea shows that without effective legislation, backed by the supply of a qualified workforce, African countries will not be able to attain optimum employment of their nationals. That is, if that is in the first place a sought-after national vision.

Nigerians, on the other hand, have learned (after many decades of the country being one of the leading oil-producing nations) that local employment would not rise, if effective legislation was not passed to enforce the employment of Nigerians. The error made in Nigeria for over three decades was assuming that oil companies would voluntarily hire more Nigerians and thus develop the economy.

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Nigeria started a slow push towards local employment in 1973 by creating the Petroleum Technology Development Fund (PTDF). The PTDF aimed at training Nigerians abroad and locally to acquire oil and gas skills. Funds were also used to employ European and US experts to offer local training to build the capacity of Nigerian training institutions. However, it was not until woo that Nigeria accelerated efforts to indigenise both employment and services in the oil and gas sector. The country's oil company, the Nigerian National Petroleum Corporation (NNPC), reviewed local content policies and practices and set up the Nigerian Content Consultative Forum in 1999 and woo.

In 2004, the NNPC created a local content unit which required oil companies to report on hiring practices and how much they spent on local goods and services in Nigeria. In the same year, the PTDF conducted a skills audit and sought to train 2,600 local engineers. It was also expected that by 2.006, 45% of goods and services used in the hydrocarbon industry would be sourced domestically. This target was anticipated to rise to 70% by 2010. To achieve these objectives, $12bn was earmarked each year while in April 2006, the Nigerian Senate passed a bill giving preference to local businesses.

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For instance, in bids for oil blocks, local contractors were to be given preference if their offers were not 10% above the lowest bid. As a result, more than 28 new local companies, in contrast with just a handful before, emerged to operate.

One particular concern of the Nigerian authorities was ensuring that oil companies did not employ workers they would not hire in their home countries because they lacked qualifications. This was aimed at creating employment for Nigerian nationals by discouraging the employment of unqualified expatriates. …

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