The Federal Government, Thursday launched a Local Content Fund for the oil and gas industry. The fund will be managed by the Nigerian Content Development and Management Board (NCDMB) in conjunction with the Bank of Industry (BOI). Minister of State for Petroleum Ibe Kachikwu who was present at the event said it would be initiated with $200 million but eventually be scaled to $1 billion.
Local operators in the oil and gas sector will have access to more funds to grow their capacity, as it will finance firms that need to acquire oil assets or operate in the oil services industry. The oil industry is a highly capital intensive one, and banks have cut down lending to the sector due to a high level of bad loans pertaining to the sector and the economic downturn in the country . A drop in the price of crude oil has left many operators struggling, especially those in the services sub sector. An increase in capacity means more jobs will be created. Despite the increase, the fund size is still grossly inadequate compared to the scale of the oil and gas industry in the country.
The Nigerian Content Monitoring and Development Board was established by the administration of President Goodluck Jonathan following the signing of the Nigerian Content Act on 22nd April 2010.
The Bank of Industry (BOI) was carved out from the Nigerian Industrial Development Bank (NIDB) which was founded in 1964. Shareholders in the bank include the Ministry of Finance (MOFI) which has 94.48% of the shareholding, the Central Bank of Nigeria (CBN) 5.2%, and the rest held by individuals.