By Rasheed Sobowale

A finance professional, Banke Shodimu, has warned that the ripple effects of COVID-19 are threatening the stability of Nigeria’s oil and gas funding chain, exposing local contractors to increased financial strain and heightening uncertainty among investors.

Shodimu, who works with Moneda Invest as a financial and data professional, said the pandemic has disrupted the delicate financing structure that powers Nigeria’s local content ecosystem, squeezing liquidity across the value chain and exposing local contractors to escalating financial strain.

According to her, the shockwaves triggered by the pandemic led to supply chain delays, heightened risk assessments, and a widened financing gap between what indigenous contractors need to execute major projects and what local banks are willing to provide under current market risks. All of which now pose a direct threat to local contractors’ ability to participate effectively in the oil and gas value chain.

“Many contractors simply cannot raise the capital they require to meet project milestones. Credit has tightened, repayment risks have risen, and local banks have become far more conservative”, she said. “The result is a growing funding deficit that threatens to derail local participation in the energy sector”.

Moneda Invest provides capital to indigenous contractors executing projects for major international oil companies (IOCs), has seen firsthand how the funding gap has affected the growth and expansion of these indigenous contractors handling major projects for the IOCs.

Shodimu explained that the funding gap has forced local contractors to explore alternative sources of finance, including foreign private equity, offshore syndicated loans, and supply-chain financing from international partners. However, accessing these facilities often comes with complex conditions and higher costs, underscoring the need for stronger domestic financing support.

“Several Nigerian contractors are beginning to look beyond local lenders. They are negotiating with foreign development finance institutions and energy-focused investment funds to bridge the liquidity shortfall,” she noted. “It’s a survival move, but it also highlights how local financing has failed to keep pace with the sector’s evolving needs.”

The Local Content Act mandates international oil companies to work with Nigerian contractors, but the pandemic-era cash squeeze has created a paradox: while demand for indigenous participation remains high, the financing capacity to meet those obligations is fast eroding.

Shodimu warned that this funding imbalance, if not urgently addressed, could stall project timelines for companies like Total and Shell, weaken contractor competitiveness, and push more investment offshore.

“There’s a real danger of losing momentum. When local firms cannot deliver because financing is unavailable, IOCs will inevitably seek faster or more reliable alternatives abroad,” she said.

Despite these challenges, Shodimu expressed cautious optimism. She noted that the crisis has prompted innovation among local firms, more Nigerian contractors are exploring automation, remote-operated technologies, and cost-efficient digital processes to reduce funding pressure. She explained that greater adoption of technology could shorten project timelines, reduce operational risk and improve lenders’ confidence in contractor capacity.

She emphasized that while technology can close some efficiency gaps, sustained recovery will require redesigned financing frameworks that share risks more equitably among government, banks, and international players. She also urged stakeholders, including the government, lenders and international oil companies, to use the lessons from the pandemic era to redesign financing frameworks that share risks more fairly.

“COVID-19 exposed a structural weakness, our overreliance on short-term, high-cost local funding. But it also gave us a chance to build something stronger. Nigeria needs a more resilient financing model that can absorb global shocks and keep local contractors in business,” she said.