Testing validity of observed indicators of local content policy in Nigeria: evidence from four-factor measurement model

This paper tests validity property of the indicators that measured local content policy (LCP) in Nigeria’s oil sector. Survey data were obtained for the test, using confirmatory factor analysis (CFA) method. The results obtained from a four-factor measurement model confirmed the LCP indicators to be valid. This reflects that the policy can achieve its developmental targets on local value creation with particular reference to increased local firms’ participation, backward linkages, and job creation in Nigeria’s oil sector. Hence, government should focus on effective implementation and compliance of the policy rather than “labour clause” as contained in the local content Act. However, government should be aware of the trade-off that the policy may entail

Mediating effects of indigenous oil firms’ participation and backward linkages on the relationship between local content policy and job creation: Insight from Nigeria

The increase in indigenous oil firms’ participation (IOFP) and backward linkages through which additional jobs could be created was the main target of the local content policy (LC policy) implemented in the Nigerian oil sector over the past decade. Thus, the purpose of this paper is to assess whether IOFP and backward linkages mediate the relationship between the LC policy and job creation in the country’s oil sector on which there was little empirical research. Data obtained from Nigerian indigenous oil service firms through self-administered questionnaires were analysed by using a bootstrapping technique. Our results revealed that there was an indirect effect of the LC policy on the creation of new jobs. This finding sheds light on the positive impact of the LC policy. Our results imply that if Nigeria’s LC policy is effective and efficient, increased job opportunities will follow. This may speed up the country’s vision of 2020 on value-addition in achieving economic development through the oil sector