[Nigeria] Oil & gas sector accelerate poverty in Nigeria says LCCI

from The Vanguard

The Lagos Chamber of Commerce and Industry has appealed to operators in the Oil and Gas Sector of the National economy to help in the fight against the threatening poverty situation in the country. The Chamber’s President, Dr. Herbert Ademola Ajayi, who made this call weekend in Lagos, during the Chamber’s First Quarterly Business Luncheon at the Golden Gate Restaurant, Ikoyi, under the theme “Business Opportunity In The Oil & Gas Sector, ” noted that the greatest challenges facing Nigeria’s economy today is the poor linkages between the Oil and Gas sector. He pointed out that government has made an average investment of $10 billion annually and more than 80 per cent of the job value are done outside of the shores of the country, which he said has resulted in the high level unemployment in the country.

According to him” Oil sector has contributed less than 15 per cent to the GDP and employs less than 1 per cent of the indigenous labour force . “For years now the Oil Sector has generated over 90 per cent of the nation’s Foreign Exchange, earning over 70 per cent of total revenue. For an average Nigerian, this major defect explains why the impact of the Oil sector on the economy has not been noted. The Oil revenue accrues to the nation in Dollars and monetised for distribution through the Federation account and this monetisation has considerable impact in increasing money supply which erodes purchasing power and inevitably worsens the poverty conditions and fuels inflation ” he stated.

He describes this scenario as a “poverty in the midst of plenty arguing that there is now a deliberate effort and policy to promote the more desired linkages between oil and gas sector and the rest of the economy through the Nigerian local content initiative for the oil and gas sector.

Commending the Federal Government and the Nigerian National Petroleum Corporation (NNPC) for what he described as their blazing commitment to the local content policy, he reasoned that for the target of 45 per cent Nigerian content set for 2006 and 70 per cent for 2010 to have meaningful impact on poverty reduction and job creation, the nation needs to truly grow the economy.

He also lauded the present government in the drive to attracting foreign investments but he stressed that the Foreign Direct Investments (FDI) will not be beneficial to the economy, except if they come with a number of development attributes which includes the number and quality of jobs that will be created and the degree of local value addition and opportunities for technology transfer.

“These attributes should be taken into account for our quest for foreign investments. It is becoming very obvious that the public sector refineries cannot cope with the ever growing demands of petroleum products in the country.” rest of the domestic economy and does not have a multiplier effect that could significantly benefit the citizens, he says with the new policy regime, that a remarkable impact with regard to job creation and local value addition and higher multiple effect of the activities of the oil and gas sector on the rest of the economy, he also expresses the Chambers concern over the slow pace of private investment in the downstream oil sector.