Nigeria is Africa’s most populous country, its biggest economy, and Africa’s 2nd largest oil producer. In 2013, the petroleum sector accounted for approximately 14% of Nigeria’s Gross Domestic Product (GDP) and more than 95% of exports.
This wealth, however, is not being converted into benefits for most people in Nigeria. In 2010, nearly 61% of Nigerians were living in absolute poverty. A former Nigerian government minister estimated that Nigeria has lost more than US $400 billion to ‘oil thieves’ since the country gained independence in 1960.
The Nigerian Extractive Industries Transparency Initiative (NEITI) has exposed numerous irregularities in the management and administration of oil revenues by the Nigerian National Petroleum Corporation (NNPC).
NEITI audits have revealed that between 1999 and 2011, the underassessment of taxes, rents, royalties and other process lapses resulted in total revenue losses of $9.8 billion. Furthermore, the Nigerian Liquefied Natural Gas Company (NLNG) paid dividends to the NNPC, but there is no evidence that $11.6 billion of these funds were ever remitted to the government, as required by law.
Civil society pressure, backed by the NEITI analysis, resulted in the introduction of major reforms by President Buhari. These include a “Single Treasury Account System”, which should help eliminate fraudulent practices associated with government agencies using multiple accounts to collect extractive revenue, the creation of a new Committee of the National Economic Council to investigate transfers between the Federation account and revenue generating government agencies, and the creation of a Presidential Committee on Anti-Corruption, which will serve as a platform for all anti-corruption agencies to allow for information, advice and experience exchange. In addition, the Managing Director of NNPC has signalled his intent to transfer all NLNG dividends directly to the Federation, in line with the law and with NEITI demands. This move should bring $11.6 billion into government coffers.
NEITI, along with other organisations, has managed to recover $2.4 billion, but at least $7.4 of the original missing $9.8 billion remains unrecovered.
Dr. Orji Ogbonnaya Orji, Director of Communications at the NEITI said: “The NEITI welcomes with hope and optimism the courageous steps taken so far by President Muhammed Buhari’s Administration to restructure the management and administrative organs of the NNPC (…). The measures are consistent with the findings and recommendations of NEITI.”
- Data based analysis constitutes a powerful advocacy tool and can lead to major reforms of the oil and gas revenue management system.
- State-owned extractive companies and related agencies can be best monitored and held accountable if detailed data on oil-related financial transfers is available to the civil society.
Photo credit: Clara Sanchiz