Entrepreneurial implications of Nigeria's oil industry local content policy

Ugwushi Ihua, Olatunde Abiodun Olabowale, Kamdi Nnanna Eloji and Chris Ajayi

Journal of Enterprising Communities: People and Places in the Global Economy, 2011, vol. 5, issue 3, 223-241

Abstract: Purpose - The purpose of this paper is to investigate the efficacy of Nigeria's oil and gas industry local content (LC) policy, with particular reference to how the policy has enhanced entrepreneurial activities and served as panacea to resolving some of the country's socio‐economic challenges within the oil‐producing Niger Delta region. Design/methodology/approach - Survey data were randomly obtained from a questionnaire sample of 120 indigenes in Bayelsa, Delta and Rivers states; and subjected to factor‐analysis using varimax rotation to identify the most crucial factors likely to influence the success of the policy. Cronbach's α was also applied to ascertain the reliability of the data and overall agreement amongst respondents. Findings - The study reveals a general level of indifference amongst the respondents, and an insignificant level of entrepreneurial implication, regarding the LC policy. Notwithstanding, the need to create business prospects, jobs opportunities, and establish special quota arrangements to benefit indigenes of the oil producing host‐communities were found to be most crucial in their assessment of the policy's efficacy. Practical implications - It is expected that the policy should stimulate and open up more channels for budding entrepreneurial activities, job opportunities and wealth generation. These would mitigate situations of unwarranted militant activities, social disorder and disguised criminalities such as kidnapping and destruction of oil installations, resulting from perceived marginalisation, massive unemployment and poor living standards experienced within the region. Originality/value - The study provides insights into how the LC policy, if properly harnessed and judiciously implemented, can generate win‐win outcomes for the nation, multi‐national oil companies, host communities and indigenous entrepreneurs.

Keywords: Entrepreneurial activities; Sector development; Local content policy; Niger Delta; Nigeria; Oil industry; Small to medium‐sized enterprises (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jecpps:v:5:y:2011:i:3:p:223-241

DOI: 10.1108/17506201111156698

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