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Wabote urges oil firms to invest in research development

by Business News Report

Nigerian Content Development and Monitoring Board (NCDMB) has challenged the oil companies to set aside a percentage of their annual budget to fund Research and Development so as to benefit from tax incentives. Executive Secretary of the Board, Mr Simbi Wabote, stated this at the Nigerian Oil & Gas Industry Suppliers’ Tax Awareness Workshop organized by the board in conjunction with the Federal Inland Revenue Service, FIRS in Yenagoa. He described as a must Research and Development, R&D as a key content development of home grown solutions and retention in the nation oil industry spending. His words, “I must stress that we can no longer neglect R&D as it is key to local content development, enhancement of future tax revenue to government, development of home-grown solutions and retention of industry spending within Nigerian financial institutions.

“It is a no-brainer that once a sustainable R&D investment culture is attained, it would be mutually beneficial to the public and private sectors.” He said that the board is leveraging on the enabling  business environment pilar of the 10-years Strategic Roadmap to collaborate with the Federal Inland Revenue Service. Wabote  highlighted the benefits of investing in research and development which includes producing innovative products and making significant tax return to government, creating jobs opportunities, remain market leaders and growing the GDP of the economy. He urged oil and gas industry players to take advantage of the Nigerian Content Development Fund in asset acquisition, contract financing and working capital and manufacturing of innovative and competitive products. “Globally, there is a consensus on the adoption of the Triple Helix model to foster partnership between the academia, industry, and Government to foster market-driven research which advances the socio-economic development of nations. This tripartite collaboration requires the combination of human, financial and policy incentives to attract needed funding critical to the growth of research. 

“Indeed, the level of technological advancement in most developed economies is a result of a combination of Government providing the enabling environment and the private sector providing the funds needed for Research and Development. The UK created incentives to boost investment in R&D through their R&D Tax Relief Scheme for small businesses and R&D expenditure credit scheme. Saudi Arabia has a tax deduction scheme available to R&D-related expenditures. Morocco also has incentives that span across several industries and corporate tax credits for R&D investments. In Nigeria, we have also commenced our journey of creating meaning of addressing our peculiar challenges by leveraging on our natural endowments. Access to the Nigerian Content Intervention Fund by the local supply chain has been one of the major contributors to the growth in local content level from less than 5% in 2010 to 54% in 2022. We are pushing for similar performance in Research and Development by sharpening our focus on the various elements that will enable the growth and appreciable impact of research and development in our economy. The bulk of R&D funding should come from the private sector who are business owners and will ultimately benefit directly from the research outcomes,” he said.

Wabote lamented the gross underfunding of research in Nigeria which is estimated to be less than 0.2 per cent of the national budget. He expressed the believe that the needed awareness would be created through the workshop to enable private sector to reverse the trend. In his remarks, the Executive Chairman, Federal Inland Revenue Service, FIRS, Mr Muhammad Nami, reiterated government’s determination to continue to create the enabling tax policies to support businesses through modification of the tax codes through the Finance Act and other legislative interventions. Represented by the Senior Special Assistant, Mr Gabriel Ogunjemilusi, he noted that tax incentives has become one of the major tools government used to attract investment, stimulate economic growth, encourage compliance and support small business.

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