Graduate unemployment, especially among those with the requisite skills set in the oil and gas industry, has been a challenge. To solve this problem and grow indigenous manpower in the country, relevant government agencies such as the NNPC, DPR, CAC and others have a role to play, Gbubemi Peter Agbowu, writes.
Nigeria is a petroleum rich country, and an oil and gas producing member of Organisation of Petroleum Corporation (OPEC) since 1969. The advent of oil production turned Nigeria from a multi-sectoral economy to a mono-economy, with oil and gas providing about 95 per cent of export earnings and 70 per cent of government revenue.
This is an obvious negative economic trend, known as the ‘Dutch Disease”. Pundits have agreed that for the country to attain its true growth potential, it must rekindle other sectors of the economy; sectors for which it ironically had comparative advantages, in the not so distant past, before petroleum.
One effect of our mono-economy is the lack of a diverse enough economy to accommodate the ever growing diverse Nigerian population; majority of which are youths.
The age structure of the populace is as follows: 0-14 years account for 43.2 per cent, 15-24 years account for 19.3 per cent, while 25-54 years age group accounts for 30.5 per cent of our population.
This results in a youth dependency ratio of 84 per cent (CIA World Fact Book). These numbers vividly show Nigeria’s massive current and future youth population.
Of this youth cross-section, 50 per cent are unemployed, with graduates of tertiary institutions making about 20 per cent of youth unemployment, and often remain unemployed for upwards of five years after graduation (NISER 2013).
With the current high rate of youth unemployment, even among university graduates, coupled with the fact that Nigeria’s current predominant economic sector is the petroleum industry, massive strides must be made by the government to get the Nigerian graduate youths employed in this sector.
In Europe, since the 2008 financial crisis, there has been an increase in youth unemployment, although varied among its different countries.
One unifying trend, based on research and experience, is that young people who do not get attached to the labour market at an early stage upon graduation, risk being permanently excluded from the job market.
Such exclusion could have severe consequences not only on the personal level, but also for the long term social and financial sustainability of the country. Nigeria currently faces this dilemma, with a staggering number of its youths plagued with unemployment.
Furthermore, its university graduates are faced with the usual trend of never being able to find employment, years after graduation. The burning questions are: how do we get these able bodied, qualified individuals into the workforce?
How do we get a graduate employed in the oil and gas industry; the mainstay of the economy? How can these graduates be ushered from school leaver status to employment?
The answer lies in Federal Government’s ability to initiate and execute policies that would stimulate opportunities and assimilation of qualified graduates into the oil and gas sector.
Nigerian Petroleum Exchange (NIPEx) oversees both the e-marketplace and the Joint Qualification System (JQS) for electronic procurement, contracting and registration of contractors/service providers respectively.
This has been a welcomed development by Nigerian National Petroleum Corporation (NNPC) since its inception, and has helped to ensure transparency in the contracting process and reduction in the contract approval cycle in the oil and gas industry.
A recommendation is to use the NIPEx process to aid the transition of graduates into the oil and gas workplace. This can be achieved by enabling a process whereby exemplary graduates with outstanding results in oil and gas related degrees are able to register their details into the Nipex portal.
The system would require validation and attestation of the credentials of these recent graduates. The portal would maintain a high level of “graduate pool”, and will be organised according to their various disciplines.
When there are Invitation to Tenders (ITTs) issued by the oil and gas companies for various projects, via the portal; depending on the scope of work, most call to tenders require each prequalified bidder to submit its man-power and staffing plan, complete with CV’s, showing the bidding company’s ability to successfully execute the proposed work.
It is at this juncture that the National Petroleum Investment Management Services (NAPIMS) in conjunction with Nigeria Content Development and Monitoring Board (NCDMB) mandates a policy that man-power from the graduate pool in the portal is assigned to each bidders bid package submitted in NIPEx.
This ensures that regardless of which bidder wins the contract, it would have absorbed highly competent graduate staff who would get their much needed assimilation into the industry.
This exercise will be an advantage, not just for the graduate that is being placed, but for the contractor, who sometimes finds it difficult to find quality personnel with oil and gas related degrees. Another avenue is for the government to initiate policies that would easily enable the youths to be part of a registered and licensed local content oil and gas company, and provide measures that would pave the way for these companies integration into the Nigerian oil and gas industry.
A way of achieving this is for the government to begin a programme which mandates the Nigerian Corporate Affairs Commission (CAC) to subsidise the costs and simplify the process of company registration for qualified graduates.
This subsidisation and simplification process will be afforded to groups of youth graduates that have come together to form a company with the intention of operating in the oil and gas industry, with the support of the government.
To qualify, the group of shareholders in the company must either have the same discipline, forming a specialist company, or have different but complimentary disciplines.
An important requirement to qualify for this status would be that at least one of the shareholders of the proposed company must have at least 10 years of oil and gas industry experience in the companies proposed area of specialisation.
This is to bridge the gap of inexperience within the company. This would mean that recent graduates would need to align with an experienced industry professional.
Such a scheme is not only advantageous to a fresh graduate, but would prove beneficial to an industry worker with valuable work experience, but currently out of a job; or industry professionals that are looking to go into private business and consulting.
In parallel to the CAC registration programme, the Department of Petroleum Resources (DPR) should have a special category for these youth companies involved in this programme, to subsidise and fast track their certification process.
The laxity involved in the certification of these companies is by no means a compromise to standard and safety, but based on the premise that these companies will be assimilated and paired with established companies with all prerequisite qualifications, certifications and accreditation should be given.
Acceptable DPR licensing categories for this programme will be the general category and the major category, with the services to be licensed within these categories left at the discretion of DPR; depending on the qualifications and credentials of the company’s shareholders.
Upon successful company registration and licensing by DPR, these companies should be registered with NCDMB, as a special “Youth Integration Company”.
The aim of this status is for these companies to be assimilated into the industry, and for these companies to benefit from a training programme. While NCDMB fulfills its remit of vetting the industry procurement processes to ensure local content requirements are adhered to during the award of contracts, as directed by the Local Content Act; it should take this opportunity to mandate that these Youth Integration companies are paired with the established bidding companies, as a prerequisite for contract award.
In turn, these youth companies will act as subcontractors to the awardee, and will be required to execute a part of the contract scope. Furthermore, as it is a requirement for all companies operating in the nation’s oil and gas industry to provide a plan and execute training for its local personnel, adequate training plans for these youth companies must be submitted by the contractor, and approved by NCDMB before the award of the contract, or start of the project.
The contractor shall be required to provide the necessary insurance coverage and necessary guarantees to enable its paired Youth Integration Company (now subcontractor) execute its work.
Labour market integration training,
orientation
There is a catch 22 situation in the sense that oil and gas companies are looking to employ candidates that possess certain skill sets which are attained through industry work experience.
This puts our graduates in the dark, as no matter their academic achievement, they cannot attain these skills they are not privy to. In order to ease integration of the graduates into the labour force, the onus is on the government to ensure that they are taught these vital skills after graduation.
This will bridge the gap between the academic knowledge of the graduate and the much sought after industry work place mannerism, etiquette, understanding of processes and procedures. Skills which would ordinarily only come with work experience within an oil and gas company.
The fact of the matter is that the Nigerian graduates are intellectually competent. Despite the lacklustre, ill-equipped and badly run universities, highly competent graduates are churned out in high numbers.
Evidence of this is the success and achievement levels of Nigerian graduates who thrive and exceed their peers in post-graduate education overseas.
Despite high academic achievement, the missing ingredient from our youth graduate, which is key to employment by the oil and gas companies, is the work experience.
Drilling down into “work experience”, what is of most importance to the hiring companies, is familiarity with the industry ethics. The reason oil and gas companies bring in expatriates to man their projects in Nigeria is not solely due to their technical competence, but also due to their industry ethics.
The evidence of having worked in varying projects across the world is proof that the individual is knowledgeable in the industry’s code of conduct, business ethics, procedures, processes, safety standards etc.
While this is on a macro level, on a micro level, such processes and standards are company specific, as individual companies have their specific modus operandi. This is particularly the case with multinational companies with huge operations across the world.
The aim of such standards is unification of its global operation, where a worker in for instance, Brazil can easily come to work in a project in Scotland with a very short learning curve.
This is the reason a firm such as Chevron will prefer to hire a worker that has previous Chevron experience, as he or she would know the “Chevron way”.
As a result of this trend among the oil and gas companies, a recommendation for our government in aiding the hiring of our graduate youths, is for each NNPC Joint Venture, such as Shell Petroleum Development Company (SPDC), Chevron Nigeria Limited (CNL), Mobil Producing Nigeria Unlimited (MPNU), under their Joint Operating Agreement (JOA), to set up training programs under their JV.
The aim of these programmes will be to furnish these youth graduates with the skillsets required to work successfully within their joint venture companies.
The curriculum would focus on team building initiatives, company policies, procedures and job skills specifically catered to the requirements of the companies. This would enable each student’s easy assimilation into these companies, upon completion of the training and orientation.
The training would be certified, thereby making each graduate more marketable to companies in the industry as a whole. A key advantage of the JV initiated training programme is the JVs knowledge of their upcoming projects, manpower specific requirements and the skills and disciplines needed for these projects.
This would ensure that the training programs are fit for purpose and prepares its students for the upcoming projects. With all this said, what is of most importance is for the Nigerian Petroleum industry to be stimulated.
This is what will spur the multiplier effect that would lead to more industry activities, spending on projects and the resultant need for industry personnel; to accommodate our graduate youths.
The Petroleum Industry Bill (PIB), looming in the air for years without passage, has created the Achilles heel to any industry’s development; uncertainty.
The uncertainty of the fiscal regime, and petroleum laws that will be in place, has prevented spending of billions of dollars on new projects in Nigeria, by the International Oil Companies (IOC’s).
Furthermore, although Nigeria unfortunately missed out on a flurry of industry activities during the era of $100 oil, it must be more pragmatic now with a lower price for oil, and a glut of the commodity on the world market.
What is needed is an efficient PIB that secures an appropriate amount of economic rent for the Nigerian government, but yet allows operators to continue a profitable business, particularly in riskier ventures such as deep offshore exploration, new frontier basin exploration and non-associated gas development.
Such an environment will increase oil companies’ confidence in operating in Nigeria amidst a global downturn in global spending. Government policy is required to stir our industry further down the petroleum value chain, stimulating activity in refining and petrochemicals; to create further value from our oil, in a low priced market.
Government policies that streamlines the process of licensing and approval of modular refineries, blending plants, and other downstream capital projects and promoting availability of feedstock for these projects is invaluable.
These projects would create added value, increased revenue, sector growth, and much needed job opportunities for our graduate youths. In conclusion, there is no doubt that Nigeria needs to make active strides to develop its ailing real sectors such as manufacturing and agriculture to increase its growth and create jobs for its fast growing youth population.
However, in the current state where the petroleum industry is the mainstay of the economy, and unemployment of the youth is at staggering levels, the government must step in with the right policies to guide the industry down the right path, and in parallel, ensure that qualified youths can gain employment in a more efficiently run industry amidst current global challenges
Agbowu, a Contracts Advisor in Saudi Aramco and a promoter, Star Delta Energy Services can be reached via email: info@stardeltaes.com; twitter: @GPAStarDelta.
