Evaluation of the Determinants of the Nigerian Manufacturin | 17779
International Research Journals

Journal of Research in Economics and International Finance

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Evaluation of the Determinants of the Nigerian Manufacturing Sector Ability to benefit from the Nigerian Oil and Gas Industry Content Development Bill Using Vector Auto Regressive Model (VAR)


Gamil Helmy Abdulwahed

On March 2010, The Nigerian government has introduced the Nigerian Oil and Gas Industry Content Development Bill, which aims at supporting local providers of goods and services as well as giving the first and the top priority in employment to the Nigerian workers. This Bill provides many opportunities for the Nigerian Manufacturing sector. However, the question is whether the Nigerian business climate can enable this sector to seize this chance. This paper is an addition to previous studies that were conducted to determine the factors affecting Capacity Utilization (CU) in Nigeria. The paper depended on SWOT analysis for the Nigerian manufacturing sector as well as literature review, and then followed by applying the Vector Auto Regressive Model (VAR) to determine the most influential factors affecting Nigerian Manufacturing sector ability to benefit from Local Content Development Bill. The results show that the most influential factors are Electricity Generation (ELEC), Capital Goods Imports (IM) and Interest Rates (IR). The paper recommends the Nigerian government to focus on modernizing the efficiency of existing power stations and establishing new power stations, There is also an importance to decrease the applied tariffs and apply drawback regimes on capital goods imports to support the Nigerian manufacturing sector to modernize production equipment so as to be able to produce competitive goods complying with the high technology specifications of oil and gas sector. In addition, the sum of one percent of every contract awarded to any operator in the oil and gas sector is inadequate for the Nigerian content development fund. Therefore, the government must support the fund with annual sufficient budget.

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