For a country that wants to develop and grow its local production capacity, nationalisation and indigenisation are usually deliberate policy options. Economic indigenisation is the action or process of bringing the production power of a country under the control, dominance, or influence of indigenes of the state or city, while nationalisation stretches it to ownership and control by citizens of country.
This means that in addition to aiding takeover or ownership of companies by the locals, the government creates and maintains certain favourable policies that aid the growth of companies owned by citizens.
In several African countries, especially Southern Africa, indigenisation and nationalisation are obvious economic concepts. From Angola across Namibia, Botswana, Zimbabwe and down to South Africa, the concepts are in the core of governments’ economic policies aimed at giving production power to citizens instead of foreigners.
According to Sébastien Thouvenot in his ‘South Africa: State Participation, Indigenisation And Economic Empowerment In Africa,’ the policy is aimed at giving a controlling interest of not less than 51 per cent of the shares or interest in an enterprise to black indigenous Zimbabweans.
In Angola, the ‘Angolanisation’ seeks to ensure preferential treatment of Angolan businessmen and also stipulates that companies must conform to a ratio of 70 per cent national workers to 30 per cent foreign workers.
“In Botswana, the government proactively encourages citizen businesses and entrepreneurs. Certain tenders are restricted to citizen-owned companies and citizen-owned or majority citizen-owned companies enjoy preference during tender evaluations. Certain manufacturing activities are also restricted to citizens and citizen-owned companies. The government has set up the Citizen Entrepreneurial Development Agency to provide fledgling citizen-based companies with technical, financial and managerial assistance,” Thouvenot stated.
Other countries tend to apply this policy for specific and strategic sectors. This is the case in the Democratic Republic of Congo where land concessions for agriculture shall only be granted to Congolese individuals or companies having the state or Congolese individuals or companies as shareholders.
In Nigeria, the story is different. Local firms owned by Nigerians are orphans and like orphans without care and nurture, they fizzle away within their gestation period. Those which survive the gestation period struggle to remain in existence. Mega foreign companies are allowed to flourish and stifle the growth of indigenous firms. Even when there are policies to protect indigenous firms, such policies are not enforced.
The case that easily comes to mind in the maritime sector is the Coastal and Inland Shipping Act, 2003, otherwise known as the Cabotage Act. The law was created to protect local shipping lines, give them jobs and competitive advantage over their foreign counterparts on Nigerian waters, as well as provide cheap credit for vessel acquisition.
However, the act remained unenforced nearly two decades after its creation and many indigenous shipping firms have closed shop after suffering heavy indebtedness.
In the oil logistics sector, two firms control separate free zones. The Lagos Deep Offshore Logistics Base, the only indigenous firm managing a free zone and operating in the South-west of Nigeria has not had it rosy in the last two years. While its foreign partners, Samsung Heavy Industries Nigeria are battling it for contracts gone foul, the Nigerian Ports Authority is on its neck over terms on its land lease, accusing the company of “shortchanging the federal government.”
Even with clear favourable presidential intervention to protect the indigenous firm, the NPA appears to want to frustrate the only Nigerian oil and gas logistic firm operating with over 5,000 Nigerian workforce.
President Muhammadu Buhari in a letter dated June 3, 2020, through the Minister of Justice, Abubakar Malami, SAN, directed that NPA should comply with subsisting approval for 25 years’ lease covering 114.552 hectares granted to Messrs Global Resources Management Ltd, a subsidiary of LADOL in 2018.
The president also directed that “that all relevant agencies comply with the legal option which is geared towards resolving the dispute, restoring investor confidence to the industry and bringing NPA actions in conformity with extant laws and federal government’s policy on local content.”
In the legal option which was a product of multifaceted efforts at resolving the issue between SHIN and LADOL, Malami stipulated among others, that “in furtherance of the fact that Samsung was involved with the upgrade of the facility in the status of a ‘contractor’ and not as an ‘investor’ as alluded to by the Nigerian National Petroleum Corporation and Total in their letters, the company should refrain from pressing its recent claim of ‘ownership’ of the facility (on the basis of having allegedly spent $270m to construct it).”
Weighing in on the issue, John Udenwa, a shipper, said, “We have heard the Managing Director, NPA, Hadiza Bala-Usman, say that the successful berthing of Egina FPSO (a flagship oil and gas project of LADOL) was as a result of operational efficiency and very robust synergy between the NPA, LADOL and other stakeholders. This means that LADOL is doing well and as an indigenous company, the least NPA could do is to give LADOL all the support it needs.
“From reports I have from the media, the NPA MD has also confirmed that the port authority had gained up to 40 per cent cost savings from working with LADOL, saving Nigeria hundreds of millions of dollars, and helping to make Shell’s investments in Nigeria internationally competitive. This is also a good testimony coming from her. So, one begins to wonder why she wants to seize LADOL’s yard. The scuffle is not warranted. What LADOL needs from NPA now is support, more support and a lot more support.”
According to the Chairman of LADOL, Oladipo Jadesimi, the relationship with NPA is one of landlord and tenant. There is no profit-sharing agreement in place between LADOL and NPA.
“LADOL is fully compliant and has paid its rent in full to NPA, an amount totalling N880.6m for the last two years. Ironically, NPA’s purported lease to Samsung Heavy Industries Nigeria Limited exactly mirrored the terms of the LADOL lease and would have halved NPA’s income from the LADOL area to N230.3m – the amount NPA purported to charge Samsung,” Jadesimi explained.
The LADOL chairman maintained that Samsung was only a contractor to Total to build the Egina FPSO and could not have had a profit-sharing agreement with LADOL, the free zone manager.
“Again, the private investors that need protection are the LADOL stakeholders who have invested hundreds of millions building the Zone for 19 years and from whom Samsung collected an additional $40.5m as part payment for the construction of the yard, which Samsung built as an EPC contractor, for which the federal government is ultimately liable in repayment,” he noted.
Executive Director Marine and Operations, Onari Brown, while touring LADOL’s facilities recently stated that he was impressed by the infrastructural development in LADOL, and commended its agriculture initiative, saying, “Talking about agriculture, I am so impressed because in every country, the major thing that can cause the highest crisis is food insufficiency. In this time of COVID-19, Nigerians have come to realise that she cannot rely on crude oil and that we need to grow our maritime sector. We need a company like LADOL to achieve this tall dream.”
Speaking on the Nigerian dream, which is core to LADOL’s mission, its Managing Director, Amy Jadesimi said, “LADOL provides a lot of employment and training. I also want to thank all the staff and management of LADOL who worked so hard and came together as a strong team which continues to see us through the COVID-19 pandemic. I have to say across Nigeria, we saw many examples of how this crisis has brought Nigerians together and renewed our focus for self-sufficiency.”
The Managing Director of the Nigeria Export Processing Zones Authority, Prof. Adesoji Adesugba, who also toured the LADOL facilities recently, said, “More than $1bn is spent by Nigerians going abroad for medical tourism every year. Now that we have world standard health facilities at LADOL’s free zone, we now have an opportunity to attract very good investment in this sector and to get the hospital to come very close to us in Nigeria by using the free zone strategy.”
According to him, LADOL setting up more cold storage facilities can also service the fishing industry in the country.
“Such harmony will ensure that free zones can contribute significantly to Nigeria’s economic growth and meet the government’s objectives of encouraging industrialisation. Strengthening of the NEPZA free zone scheme will make Nigerian industries highly competitive, especially in the light of the recently signed the Africa Continental Free Trade Agreement that has the same rules and standards of other Free Zones across the world,” the NEPZA boss added.
